(Appendix 5A)Wahler Corporation Manufactures and Sells One Product

question 16

Multiple Choice

(Appendix 5A) Wahler Corporation manufactures and sells one product.In the company's first year of operations, the variable cost consisted solely of direct materials of $85 per unit.The annual fixed costs were $640, 000 of direct labor cost, $2, 208, 000 of fixed manufacturing overhead expense, and $1, 140, 000 of fixed selling and administrative expense.The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 32, 000 units and sold 30, 000 units.The company's only product is sold for $249 per unit. The net operating income for the year under super-variable costing is:

• A)$1, 110, 000
• B)$932, 000
• C)$972, 000
• D)$762, 000

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Definitions:

Federal Personal Income Tax

A tax levied by the federal government on the yearly income of individuals, with the rate applied varying according to the income level.

Progressive Taxes

A tax system in which the tax rate increases as the taxable amount increases, placing a higher tax burden on individuals with higher incomes.

Proportional Taxes

A tax system where the tax rate remains constant regardless of the amount on which the tax is imposed, resulting in taxes being proportionate to the income.

Direct Taxes

Taxes paid directly to the government by the individual or organization on whom it is levied, such as income tax or property tax.