Fomtech,Inc

question 93

Multiple Choice

Fomtech,Inc.had net income of $750,000 based on variable costing.Beginning and ending inventories were 50,000 units and 48,000 units,respectively.Assume the fixed overhead per unit was $.75 for both the beginning and ending inventory.What is net income under absorption costing?

• A) $751,500
• B) $676,500
• C) $823,500
• D) $748,500
• E) $750,000

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Definitions:

Cash Dividends

A redistributive payment of a portion of a company's earnings, made in cash, to its shareholders.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, equal to the share capital plus retained earnings.

Premium

An additional amount over the normal cost, or the portion of insurance payments above the cost of the insured risk.

Discount

A reduction applied to the usual cost of goods or services, or in finance, an amount deducted from the face value of a bill of exchange or loan.