ackenzie, Inc. has collected the following data. (There are no beginning inventories.) Units produced 600 units Sales price $ 120 per unit Direct materials $ 30 per unit Direct labor $ 13 per unit Variable manufacturing overhead $ 6 per unit Fixed manufacturing overhead $ 17 comma 800 per year Variable selling and administrative costs $ 4 per unit Fixed selling and administrative costs $ 14 comma 200 per year What is the ending balance in Finished Goods Inventory using absorption costing if 400 units are sold? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.) A. $ 15 comma 734 B. $ 21 comma 267 C. $ 9 comma 800 D. $ 5 comma 933

Question

Business

Nia Simon

20 February, 12:13

ackenzie, Inc. has collected the following data. (There are no beginning inventories.) Units produced 600 units Sales price $ 120 per unit Direct materials $ 30 per unit Direct labor $ 13 per unit Variable manufacturing overhead $ 6 per unit Fixed manufacturing overhead $ 17 comma 800 per year Variable selling and administrative costs $ 4 per unit Fixed selling and administrative costs $ 14 comma 200 per year What is the ending balance in Finished Goods Inventory using absorption costing if 400 units are sold? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.) A. $ 15 comma 734 B. $ 21 comma 267 C. $ 9 comma 800 D. $ 5 comma 933

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Answers (1)

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Blast · Answer 1

The correct answer is A.

Explanation:

Giving the following information:

Units produced = 600

Direct materials $30 per unit

Direct labor $13 per unit

Variable manufacturing overhead $6 per unit

Fixed manufacturing overhead $17,800 per year

Ending inventory = 600 - 400 = 200 units

Under absorption costing, the fixed overhead costs get allocated to the product cost. First, we need to calculate the unitary fixed overhead cost:

Unitary fixed overhead = 17,800/600 = $29.67

Now, we can determine the total unitary cost:

Unitary cost = direct material + direct labor + total overhead

Unitary cost = 30 + 13 + (6 + 29.67) = $78.67

Ending inventory = 200*78.67 = $15,736