in the first year of operations, Kelley company produced 10000 units and sold 7000 units. its unit costs were as follows:

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in the first year of operations, Kelley company produced 10000 units and sold 7000 units. its unit costs were as follows: direct materials 12$, direct labour 8$ , variable manufacturing overhead 2$ , variable selling and administrative expenses 1$. Its total fixed manufacturing overhead for the year was 50,000$.

1- What is the amount of cost of goods sold under variable costing

a- 220,000$

b-161,000$

c-154,000$

d-230,000$

2-what is the amount of cost of goods sold under absorption costing

a-189,000$

b-196,000$

c-179,000$

d-186,000$

3-When comparing Kelley’s absorption costing net operating income to its variable costing net operation income, which of the following will be true .

a- Its absorption costing net operating income will be 35,000$ lower than its variable costing net operating income.

b- Its absorption costing net operating income will be 35,000$ higher than its variable costing net operating income.

c- its absorption costing net operating income will be 15,000$ lower than its variable costing net operating income.

d- its absorption costing net operating income will be 15,000$ higher than its variable costing net operating income.

4- Ferguson products Inc, a manufacturer , reported 130$ million in sales and a loss of 25$ million in its absorption costing income statement provided to shareholders. According to a CVP analysis prepared for management , the company’s break-even point is 120$ million in sales.

Assuming that the CVP analysis is correct , is it likely that the company’s inventory level increased , decreased, or remained unchanged during the year and explain

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