The Following Income Statements Are Provided for Li Company's Last

question 54

Multiple Choice

The following income statements are provided for Li Company's last two years of operation: $\begin{array}{lrr}&\text { Year 1}&\text { Year 2}\\\text { Number of units produced and sold } & 3,500 & 3,000 \\\text { Sales revenue } & \$ 101,500& \$ 87,000 \\\text { Cost of goods sold } & 68,000& 60,000 \\\text { Gross margin } & 33,500& 27,000 \\\text { General, selling, and administrative expenses } & 13,000& 12,00 0 \\\text { Net income } & \$ 20,500 & \$ 15,000\end{array}$ Assuming that cost behavior did not change over the two-year period,what is the annual amount of the company's fixed manufacturing overhead?

• A) $12,000
• B) $24,000
• C) $26,000
• D) None of these

---

Definitions:

Physical Changes

Alterations in the form, appearance, or state of matter of a substance without changing its chemical composition.

Sexual Development

The process of physical and emotional changes that occur as a person matures sexually, including puberty and the development of sexual identity.

HIV

Human Immunodeficiency Virus, a virus that attacks the immune system and, if not treated, can lead to Acquired Immunodeficiency Syndrome (AIDS).

AIDS

Acquired Immune Deficiency Syndrome, a life-threatening condition caused by the Human Immunodeficiency Virus (HIV), impairing the immune system.