Carpenter Corporation Carpenter Corporation produces a single product that sells for $7.00 per unit. Standard capacity is 100,000 units per year; 100,000 units were produced and 80,000 units were sold during the year. Manufacturing costs and selling and administrative expenses are presented below.There were no variances from the standard variable costs. Any under- or overapplied overhead is written off directly at year-end as an adjustment to cost of goods sold. Fixed costsVariable costsDirect material$0$1.50 per unit producedDirect labor01.00 per unit producedManufacturing overhead$150,0000.50 per unit producedSelling & Administration expense80,0000.50 per unit soldCarpenter Corporation had no inventory at the beginning of the year.Refer to Carpenter Corporation. In presenting inventory on the balance sheet at December 31, the unit cost under absorption costing isSelect one:a. $3.00.b. $2.50.c. $3.50.d. $4.50.

Absorption costing, also known as "period cost," is a managerial accounting method that captures all…

Answered: penter Corporation produces a single…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Carpenter Corporation

Carpenter Corporation produces a single product that sells for $7.00 per unit. Standard capacity is 100,000 units per year; 100,000 units were produced and 80,000 units were sold during the year. Manufacturing costs and selling and administrative expenses are presented below.

There were no variances from the standard variable costs. Any under- or overapplied overhead is written off directly at year-end as an adjustment to cost of goods sold.

	Fixed costs	Variable costs
Direct material	$0	$1.50 per unit produced
Direct labor	0	1.00 per unit produced
Manufacturing overhead	$150,000	0.50 per unit produced
Selling & Administration expense	80,000	0.50 per unit sold

Carpenter Corporation had no inventory at the beginning of the year.

Refer to Carpenter Corporation. In presenting inventory on the balance sheet at December 31, the unit cost under absorption costing is

Select one:

a. $3.00.

b. $2.50.

c. $3.50.

d. $4.50.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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