Locklear,Inc The Operating Income Calculated Using Variable Costing and Absorption Costing

question 189

Multiple Choice

Locklear,Inc.reports the following information for the year ended December 31: $$\begin{array} { | l | r | c | } \hline \text { Units sold } & 650 & \text { units } \\\hline \text { Sales price } & \$ 130 & \text { per unit } \\\hline \text { Direct materials } & \$ 25 & \text { per unit } \\\hline \text { Direct labor } & \$ 8 & \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 15 & \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 15 & \text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 6 & \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 14,000 & \text { per year } \\\hline\end{array}$$ The operating income calculated using variable costing and absorption costing amounted to $9100 and $11,200,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under absorption costing for the year.

• A) $11,850
• B) $9750
• C) $26,000
• D) $31,200

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Definitions:

Human Capital

The skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization.

Goodwill

An intangible asset that represents the value of a company's brand name, customer base, customer relations, employee relations, and any patents or proprietary technology.

SWOT Analysis

A strategic planning tool used to identify and understand the Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning.

External Environment

The external context in which an organization operates, including socioeconomic, legal, technological, and competitive factors.