Answer the Following Questions Using the Information Below:
Healesville Animates

question 141

Multiple Choice

Answer the following questions using the information below:
Healesville Animates produces and sells a luxury animal pillow for $40.00 per unit.In the first month of operation,3000 units were produced and 2250 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes:
$$\begin{array} { l l } \text { Variable manufacturing costs } & \$ 19 \text { per unit } \\\text { Variable marketing costs } & \$ 1 \text { per unit } \\\text { Fixed manufacturing costs } & \$ 30000 \text { per month } \\\text { Administrative expenses, all fixed } & \$ 6000 \text { per month } \\\text { Ending inventories: } & \\\text { Direct materials } & - 0 - \\\text { WIP } & - 0 - \\\text { Finished goods } & 750 \text { units }\end{array}$$
-Absorption costing is required for all of the following EXCEPT:

• A)generally accepted accounting principles.
• B)income tax reporting.
• C)determining a competitive selling price.
• D)external reporting to shareholders.

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Definitions:

Financial Statement Analysis

The process of examining financial statements to assess a company's financial health and make investment decisions.

GAAP

Generally Accepted Accounting Principles, a set of accounting standards and practices used to prepare financial statements.

Industry Classification

A system for categorizing companies and stocks based on their primary business activities.

Du Pont Identity

A financial analysis formula that breaks down return on equity into three components: profit margin, asset turnover, and financial leverage.