Octagonal Company Has the Following Information for 2016: Selling Price

question 46

Multiple Choice

Octagonal Company has the following information for 2016: Selling price $150 per unit
Variable production costs $40 per unit produced Variable selling and admin. expenses $16 per unit sold Fixed production costs $200,000
Fixed selling and admin. expenses $140,000 Units produced 10,000 units
Units sold 8,000 units
There were no beginning inventories.
What is the net income for Octagonal using the absorption costing method?

• A) $600,000
• B) $480,000
• C) $1,200,000
• D) $452,000

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Definitions:

Unit Price

The cost per unit of a product or service, making it easier to compare the prices of different sizes or quantities.

Producer Surplus

The difference between the actual amount a producer receives from selling a product and the minimum amount they would accept.

Minimum Acceptable Price

The lowest price at which a seller is willing to sell a product or service, often covering at least the cost of production.