Aerotrino Produces and Sells Popular T-Shirts During 2014, the Company Produced 400,000 T-Shirts and Sold 350,000

Multiple Choice

Aerotrino produces and sells popular t-shirts. Following is information about its t-shirts for 2014: $\begin{array}{ll}\text { Selling price }& \$ 15.00 \text { per } t \text {-shirt } \\\text { Variable costs: }\\\text { Production (manufacturing costs) } & \$ 3.00 \text { per } t \text {-shirt } \\\text { Selling \& administration } & \$ 1.00 \text { per } t \text {-shirt }\\\text { Fixed costs: }\\\text { Production (manufacturing costs) } & \$ 1,000,000 \text { per year } \\\text { Selling \& administration } & \$ 2,000,000 \text { per year }\end{array}$ During 2014, the company produced 400,000 t-shirts and sold 350,000 of them. Assume that there was no beginning inventory. How much is the net income under variable costing?

A) $975,000
B) $1,400,000
C) $850,000
D) $2,250,000