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

question 36

Multiple Choice

(Appendix 5A) Moffa Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: 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 54, 000 units and sold 47, 000 units.The company's only product is sold for $256 per unit. The unit product cost under super-variable costing is:

• A)$93 per unit
• B)$171 per unit
• C)$107 per unit
• D)$219 per unit

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Definitions:

Variable Cost

Costs that change in proportion to the good or service that a business produces, such as materials and labor directly involved in production.

Total Cost

The combined amount of all costs incurred during the production of goods or services, incorporating fixed and variable expenditures.

Average Fixed Cost

Costs of production that are stable (not varying with output amount) allocated across the number of units produced.

Fixed Cost

describes expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.