Harris Corporation Produces a Single Product

question 200

Multiple Choice

Harris Corporation produces a single product.Last year,Harris manufactured 17,000 units and sold 13,000 units.Production costs for the year were as follows: Sales were $780,000 for the year,variable selling and administrative expenses were $88,400,and fixed selling and administrative expenses were $170,000.There was no beginning inventory.Assume that direct labor is a variable cost. Under variable costing,the company's net operating income for the year would be:

• A)$60,000 higher than under absorption costing
• B)$108,000 higher than under absorption costing
• C)$108,000 lower than under absorption costing
• D)$60,000 lower than under absorption costing

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Definitions:

Margin

This is the difference between the selling price of a product and its cost, expressed as a percentage of the selling price.

Turnover

The speed at which a company's stock or assets are rotated or disposed of over a specific timeframe.

Return On Investment

An indicator used to assess the gain or loss generated from an investment relative to its cost.

Delivery Cycle Time

The period from when a customer order is received to when the finished product is shipped.