DeAnne Company's variable costing income statement for August appears below:

DeAnne Company
Income Statement
For the month ended August 31

\begin{array}{|l|l|l|}\hline \text { Sales }(\$ 15 \text { per unit) } & & \$ 600,000 \\\hline \text { Less: Variable costs } & & \\\hline \text { Variable cost of goods } & & \\\text { sold: } & &\\\text { Beginning inventory } & \$ 72,000 \\\hline \begin{array}{l}\text { Add: Variable cost of goods } \\\text { manufactured }\end{array} & \underline{315,000} \\\hline \text { Goods available for sale } & \$ 387,000 \\\hline \text { Less: Ending inventory } & \underline{27,000} \\\hline \text { Variable cost of goods sold } & \$ 360,000 \\\hline \text { Variable selling expense } & \underline{80,000} \\\hline\text { Total variable costs } & & \underline{\$ 440,000} \\\hline \text { Contribution margin } & & 160,000 \\\hline \text { Fixed costs: } & & \\\hline \text { Fixed manufacturing } & \$ 105,000 &\\ \text { overhead }\\\hline \begin{array}{l}\text { Fixed selling and } \\\text { administrative }\end{array} & \underline{35,000} & \\\hline \text { Total fixed costs } & & \$ 140,000 \\\hline \text { Operating income } & & \$ 20,000\\\hline\end{array}

The company produces 35,000 units each month. Variable production costs per unit and total fixed costs have remained constant over the past several months.

-Under absorption costing,what operating income (loss)did the company report for the month ending August 31?
A) ($5,000).
B) $5,000.
C) $20,000.
D) $25,000.

Indiana Corporation Produces a Single Product That It Sells for $9

Multiple Choice

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