Question
In: Accounting
A company produces a single product. Last year, fixed manufacturing overhead was $30,000 in total. Variable...
A company produces a single product. Last year, fixed manufacturing overhead was $30,000 in total. Variable production costs were $16 per unit. Fixed selling and administrative costs were $20,000 in total. Variable selling and administrative costs were $4 per unit. There was no beginning inventory. During the year, 3,000 were produced and 2,400 units were sold at a price of $40 per unit. What would be the ending finished goods inventory balance when using absorption costing?
$15,600 $9,600 $0 $12,000
Solutions
Expert Solution
Fixed manufacturing overhead per unit = Total manufacturing overhead/No. of units produced
= $ 30,000 /3,000 = $ 10
Unit cost under absorption costing = Unit variable product cost + Fixed manufacturing overhead per unit
= $ 16 + $ 10 = $ 26
No. of units in ending inventory = 3,000 – 2,400 = 600 units
Ending finished goods inventory balance = Cost per unit x no. of units in ending inventory
= $ 26 x 600 = $ 15,600
Hence option “$ 15,600” is correct answer.
ekkarill92 answered 1 year agoRelated Solutions
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