Tim's Tools, a Manufacturer of Cordless Drills, Began Operations This

question 168

Multiple Choice

Tim's Tools, a manufacturer of cordless drills, began operations this year. During this year, the company produced 20,000 units and sold 18,000 units. At year-end, the company reported the following income statement using absorption costing: Production costs per unit total $14, which consists of $12.90 in variable production costs and $1.10 in fixed production costs (based on the 20,000 units produced) . 60% of total selling and administrative expenses are variable. Compute net income under variable costing.

• A) $307,800
• B) $198,000
• C) $195,800
• D) $288,000
• E) $220,000

---

Definitions:

Demand-Side Factors

Factors affecting the quantity of a product or service demanded at a given price, including income levels, tastes, and preferences of consumers.

Finite Natural Resources

Natural resources that exist in limited quantities and are not renewable within a human lifespan, such as fossil fuels and minerals.

Per Capita Consumption

The average amount of goods or services consumed per person in a given population or area.

Birthrates

The number of live births per thousand of population per year, indicating the rate at which a population is growing.