A business operated at 100% of capacity during its first month and incurred the following costs:Production costs (18,900 units):Direct materialsDirect laborVariable factory overheadFixed factory overheadOperating expenses:Variable operating expensesFixed operating expenses171,800If 1,500 units remain unsold at the end of the month, the amount of inventory that would be reported on the absorption costing balance sheet isOa. $72,952Ob. $59,310Oc. $62,048Od. $51,913$171,300235,500247,30093,300 $747,400$127,70044,100

Using absorption Costing, all fixed and variable manufacturing costs are included in the product cost. The unit cost is calculated as total cost divided by number of units produced. Total cost using absorption costing = $747,400 Number of units produced = 18,900 Cost per unit = 747,400 / 18,900 = $39.54 Ending inventory = 1,500 units Cost of ending inventory = 1,500 * 39.54 = $59,310 Hence, option b. $ 59,310 is the correct value for cost of ending inventory.

Business

Accounting

Production costs (18,900 units): Direct materials Direct labor $171,300 235,500 247,300 93,300 $747,400 Variable factory overhead Fixed factory overhead Operating expenses: Variable operating expenses $127,700 Fixed operating expenses 44,100 171,800 If 1,500 units remain unsold at the end of the month, the amount of inventory that would be reported on the absorption costing balance sheet is Oa. $72,952 Ob. $59,310 Oc. $62,048 Od. $51,913

Production costs (18,900 units): Direct materials Direct labor $171,300 235,500 247,300 93,300 $747,400 Variable factory overhead Fixed factory overhead Operating expenses: Variable operating expenses $127,700 Fixed operating expenses 44,100 171,800 If 1,500 units remain unsold at the end of the month, the amount of inventory that would be reported on the absorption costing balance sheet is Oa. $72,952 Ob. $59,310 Oc. $62,048 Od. $51,913

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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