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During the first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials $6 per unit Direct labor $4 per unit Variable overhead $5 per unit Fixed overhead $2,34,000 The company produced 26,000 units, and sold 18,000 units, leaving 8,000 units in inventory at the year-end. What is the value of ending inventory under absorption costing? a. $120,000 b. $192,000 c. $72,000 d. $234,000

During the first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials $6 per unit Direct labor $4 per unit Variable overhead $5 per unit Fixed overhead $2,34,000 The company produced 26,000 units, and sold 18,000 units, leaving 8,000 units in inventory at the year-end. What is the value of ending inventory under absorption costing? a. $120,000 b. $192,000 c. $72,000 d. $234,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What is the value of ending inventory under absorption costing?

During the first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials $6 per unit Direct labor $4 per unit Variable overhead $5 per unit Fixed overhead $2,34,000 The company produced 26,000 units, and sold 18,000 units, leaving 8,000 units in inventory at the year-end. What is the value of ending inventory under absorption costing? a. $120,000 b. $192,000 c. $72,000 d. $234,000
Transcribed Image Text:During the first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials $6 per unit Direct labor $4 per unit Variable overhead $5 per unit Fixed overhead $2,34,000 The company produced 26,000 units, and sold 18,000 units, leaving 8,000 units in inventory at the year-end. What is the value of ending inventory under absorption costing? a. $120,000 b. $192,000 c. $72,000 d. $234,000
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