Wind Fall, a Manufacturer of Leaf Blowers, Began Operations This

question 43

Multiple Choice

Wind Fall, a manufacturer of leaf blowers, began operations this year. During this year, the company produced 10,000 leaf blowers and sold 8,500. At year-end the company reported the following income statement using absorption costing.
$\begin{array}{lr}\text { Sales }(8,500 \times \$ 45) & \$ 382,500 \\\text { Cost of goods sold }(8,500 \times \$ 20) & 170,000 \\\text { Gross margin } & \$ 212,500 \\\text { Selling and administrative expenses } & 60,000\\\text { Net Income }&\$152,500\end{array}$
Production costs per leaf blower total $20, which consists of $16 in variable production costs and $4 in fixed production costs (based on the 10,000 units produced) . Fifteen percent of total selling and administrative expenses are variable.
Compute net income under variable costing.

• A) $146,500
• B) $158,500
• C) $237,500
• D) $206,500
• E) $246,500

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Definitions:

Chief Executive

The highest-ranking officer in an organization, responsible for making major corporate decisions and managing the overall operations.

Consumer Goods

Products and services that are purchased or consumed by individuals or households for personal use.

Departmentalization

The process of dividing an organization into different departments or units, each of which specializes in a specific area of operation.

Formal Teams

Groups within an organization that are officially recognized and organized with specific roles and tasks to achieve collective goals.