1. Assume the following information for a company that produced and sold 10,000 units during its first year of operations:

	Per Unit	Per Year
Selling price	$ 200
Direct materials	$ 75
Direct labor	$ 50
Variable manufacturing overhead	$ 10
Fixed manufacturing overhead		$ 300,000

Using absorption costing, what is the companys gross margin per unit?

A) $45

B) $65

C) $35

D) $75

2. Assume the following information for a company that produced 10,000 units and sold 9,000 units during its first year of operations:

	Per Unit	Per Year
Selling price	$ 200
Direct materials	$ 73
Direct labor	$ 50
Variable manufacturing overhead	$ 11
Sales commission	$ 8
Fixed manufacturing overhead		$ 300,000

Using absorption costing, what is the companys net operating income?

A) $222,000

B) $232,000

C) $242,000

D) $252,000

3. Assume the following information for a company that produced 10,000 units and sold 9,000 units during its first year of operations:

	Per Unit	Per Year
Selling price	$ 200
Direct materials	$ 78
Direct labor	$ 50
Variable manufacturing overhead	$ 11
Sales commission	$ 8
Fixed manufacturing overhead		$ 300,000

Using variable costing, what is the companys net operating income?

A) $177,000

B) $257,000

C) $157,000

D) $167,000