During Its First Year of Operations, Holt Manufacturing Company Incurred

question 93

Multiple Choice

During its first year of operations, Holt Manufacturing Company incurred the following costs to produce 200,000 units of its only product: Holt also incurred the following costs in the sale of 180,000 units of product during its first year: Assume that direct labor is a variable cost.
-What would be the cost per unit of Holt's finished goods inventory at the end of the first year of operations under the absorption costing method?

• A) $2.34
• B) $2.74
• C) $4.50
• D) $6.30

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Definitions:

Net Operating Profit After Taxes (NOPAT)

A company's operating profit after adjusting for taxes, useful for comparing the profitability of businesses.

Weighted Average Cost of Capital

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted, used to assess the cost of funding new projects.

Taxable Income

The portion of an individual's or company's income used to determine how much tax will be owed to the federal, state, and/or municipal governments.

Shareholders

Individuals or entities that own shares in a company, giving them ownership interest.