Schaefer Company Has No Beginning and Ending Inventories,and Reports the Following

question 75

Multiple Choice

Schaefer Company has no beginning and ending inventories,and reports the following data about its only product:
$\begin{array}{ll}\text { Direct materials used } & \$ 200,000 \\\text { Direct labor } & \$ 80,000 \\\text { Fixed indirect manufacturing } & \$ 100,000 \\\text { Fixed selling and administrative } & \$ 150,000 \\\text { Variable indirect manufacturing } & \$ 20,000 \\\text { Variable selling and administrative } & \$ 60,000 \\\text { Selling price(per unit) } & \$ 50\end{array}$
$\begin{array} { l } \text {Units produced and sold }&10,000 \\\end{array}$

Schaefer Company uses the contribution approach to prepare the income statement.What is the contribution margin?

• A) $100,000
• B) $140,000
• C) $200,000
• D) $220,000

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Definitions:

Short Run

A period in economics during which at least one factor of production is fixed, limiting the ability of a business to adjust fully to market changes.

Rent Control

Government-imposed limits on the amount landlords can charge tenants for lease agreements, aimed at making housing more affordable.

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing companies to adjust to market changes fully.

Price Floor

A government-imposed minimum price charged on goods and services, aimed at preventing prices from going too low.