Octagonal Company Has the Following Information for 2016: Selling Price

question 102

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 variable costing method?

• A) $480,000
• B) $412,000
• C) $1,200,000
• D) $600,000

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Definitions:

Marginal Costs

The monetary cost of generating one more unit of a product or service.

Fixed Costs

Expenses that remain constant regardless of the amount of goods produced or sold, including items like lease payments, wages, and insurance fees.

Selling Price

The amount of money for which a product or service is sold to the customer, determining the revenue generated from sales.

Break-even Quantity

The volume of production or sales at which total revenues equal total costs, resulting in no net loss or gain for a business.