Vaughn Manufacturing sells its product for $90 per unit. During 2019, it produced 60000 units and sold 50000 units (there was no beginning inventory). Costs per unit are: direct materials $24, direct labor $14, and variable overhead $3. Fixed costs are: $720000 manufacturing overhead, and $90000 selling and administrative expenses. Cost of goods sold under absorption costing is

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Business

Music Man

1 September, 07:15

Vaughn Manufacturing sells its product for $90 per unit. During 2019, it produced 60000 units and sold 50000 units (there was no beginning inventory). Costs per unit are: direct materials $24, direct labor $14, and variable overhead $3. Fixed costs are: $720000 manufacturing overhead, and $90000 selling and administrative expenses. Cost of goods sold under absorption costing is

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Anabella Walker · Answer 1

Inventory = $530,000

Explanation:

Giving the following information:

Vaughn Manufacturing sells its product for $90 per unit. During 2019, it produced 60000 units and sold 50000 units (there was no beginning inventory).

Costs per unit:

direct materials $24

direct labor $14

variable overhead $3.

Fixed costs are:

$720000 manufacturing overhead

Manufacturing cost under absorption costing = direct material + direct labor + variable manufacturing overhead + fixed manufacturing overhead

Manufacturing cost under absorption costing = 24 * 60,000 + 14*60,000 + 3*60,000 + 720,000 = $3,180,000

Unitary cost = 3,180,000/60,000 = $53

Inventory = 53*10,000 = $530,000