McArthur Corp

Multiple Choice

McArthur Corp., which began business at the start of the current year, had the following data:
Planned and actual production: 40,000 units
Sales: 38,000 units at $15 per unit
Production costs:
Variable: $5 per unit
Fixed: $260,000
Selling and administrative costs:
Variable: $1 per unit
Fixed: $32,000
The gross margin that the company would disclose on an absorption-costing income statement is:

A) $0.
B) $133,000.
C) $166,500.
D) $342,000.
E) None of the other answers are correct.