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

question 33

Multiple Choice

(Appendix 5A) Sirmons 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 46, 000 units and sold 45, 000 units.The company's only product is sold for $249 per unit. Assume that the company uses an absorption costing system that assigns $19 of direct labor cost and $55 of fixed manufacturing overhead to each unit that is produced.The net operating income under this costing system is:

• A)$1, 321, 000
• B)$1, 225, 000
• C)$1, 395, 000
• D)$1, 340, 000

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Definitions:

Capacity Allocation

The process of distributing available production or service capacity among various products, services, or customers.

Supply Chain Performance

An assessment of how well a supply chain meets its goals of efficiency, speed, cost-effectiveness, and customer satisfaction.

Capacity Decisions

Decisions concerning the amount of resources, such as space, equipment, and labor, that an organization allocates to its operations or processes.

Capacity Allocation

The process of distributing resources and production capacity among various products, services, or activities to efficiently meet demand and optimize output.