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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Miller-Orr Model

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