Use This Information for Timmer Corporation to Answer the Questions

question 68

Multiple Choice

Use this information for Timmer Corporation to answer the questions that follow.

Timmer Corporation just started business in January. There were no beginning inventories. During the year, it manufactured 12,000 units of product and sold 10,000 units. The selling price of each unit was $20. Variable manufacturing costs were $4 per unit, and variable selling and administrative costs were $2 per unit. Fixed manufacturing costs were $24,000, and fixed selling and administrative costs were $6,000.

-What would Timmer's net income be for the year using absorption costing?

• A) $114,000
• B) $110,000
• C) $4,000
• D) $106,000

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Definitions:

Comparative Advantage

The capability of a nation, person, corporation, or area to create a product or service at a reduced opportunity cost compared to its rivals.

Vast Resources

An abundance of natural, financial, or human resources available for use or development.

Specialization And Trade

A principle whereby individuals, firms, or countries produce a limited range of goods with higher efficiency and trade for other goods they are less efficient at producing.

International Trade

The exchange of goods and services between countries, driven by comparative advantages.