Azure Company Predicted Factory Overhead for 2018 and 2019 Would

Multiple Choice

Azure Company predicted factory overhead for 2018 and 2019 would be $150,000 for each year. Direct labor hours were predicted as 35,000 hours for 2018 and 25,000 hours for 2019. Additional data are as follows: $\begin{array}{lcc}&2018&2019\\\text { Sales in units } & 40,000 & 40,000 \\\text { Selling price per unit } & \$ 30 & \$ 30 \\\text { Direct materials and direct labor per unit } & \$ 15 & \$ 15\end{array}$ The company assumes that the long-run normal production level is 25,000 direct labor hours per year. The actual factory overhead cost for the end of 2018 and 2019 was $150,000. Assume that it takes one direct labor hour to make one finished unit.
When the normal factory overhead rate is used, the gross profits for 2018 and 2019, respectively, are

A) $320,000 and $320,000, respectively.
B) $720,000 and $720,000, respectively.
C) $400,000 and $400,000, respectively.
D) $360,000 and $360,000, respectively.