Classix Products Reported $28 000 in Net Profit for the Year

question 28

Multiple Choice

Classix Products reported $28 000 in net profit for the year using variable costing. The company had no units in beginning inventory, planned and actual production was 30 000 units, and sales were 25 000 units during the year. Variable manufacturing costs were $15 per unit and total budgeted fixed manufacturing overhead was $150 000. There was no underapplied or overapplied overhead reported during the year. Determine the net profit under absorption costing.

• A) $28 000
• B) $30 000
• C) $53 000
• D) $58 000

---

Definitions:

Franchise Agreement

A legal contract between a franchisor and franchisee, outlining terms for the franchisee to operate under the franchisor's brand and system.

Franchisee

An individual or company that holds the right to operate a franchise, selling goods or services under a franchisor's brand.

Franchisor

A franchisor is a business entity that grants the right to use its trademark or business model to other businesses (franchisees) in exchange for a fee.

Expansion

The process of enlarging the scale of operations, increasing the production capabilities, or broadening the scope of a business.