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

question 2

Multiple Choice

(Appendix 5A) Prehn 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 36, 000 units and sold 30, 000 units.The company's only product is sold for $251 per unit. Assume that the company uses a variable costing system that assigns $28 of direct labor cost to each unit that is produced.The unit product cost under this costing system is:

• A)$179 per unit
• B)$227 per unit
• C)$109 per unit
• D)$81 per unit

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Definitions:

Net Income

The income a company retains following the subtraction of all costs and taxes from its total revenue.

Income Statement

A financial statement that shows a company’s revenues and expenses over a specific period, ending with net income or loss.

Adjusted Trial Balance

A list of all accounts and their balances after adjustments are made, used to verify the balance of debits and credits.

Net Income

The total profit of a company after all revenues and gains are added to the account and all expenses and losses are subtracted.