Aces,Inc,A Manufacturer of Tennis Rackets,began Operations This Year Production Costs Per Tennis Racket Total $38,which Consists of $25

question 116

Multiple Choice

Aces,Inc.,a manufacturer of tennis rackets,began operations this year.The company produced 6,000 rackets and sold 4,900.At year-end,the company reported the following income statement using absorption costing.
$\begin{array}{lr}\text { Sales }(4,900 \times \$ 90) & \$ 441,000 \\\text { Cost of goods sold }(4,900 \times \$ 38) & \underline{ 186,200} \\\text { Gross margin } & \$ 254,800 \\\text { Selling and administrative expenses } & \underline{7 5 , 0 0 0} \\\text { Net Income } & \underline{\$ 179,800}\end{array}$

Production costs per tennis racket total $38,which consists of $25 in variable production costs and $13 in fixed production costs (based on the 6,000 units produced) .Ten percent of total selling and administrative expenses are variable.Compute net income under variable costing.

• A) $194,100
• B) $165,500
• C) $311,000
• D) $240,500
• E) $233,000

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