Question

Berry's Boxes manufactures boxes. It expects to sell 20,000 boxes in 2015. The company had enough beginning inventory of direct materials to produce 24,000 units. Beginning inventory of finished units totalled 2,000 with a target ending inventory of 2,500 units. The boxes sell for $3.00 and the company keeps no work-in-process inventory. Direct materials costs for each box total $1.00 while direct labour is $0.50. Factory overhead is $0.20 per box.


What will be Berry's Boxes cost of goods sold in 2015?

		$30,000
		$42,000
		$34,000
		$24,000
		$38,000

Answer 1

Solution:

The correct answer is Option (C).

From the given data first we need to calculate the cost of units manufactured per unit:

= 1.00 + 0.50 + 0.20

= 1.70

Berry's Boxes cost of goods sold in 2015:

= 20,000 * 1.70

= $34,000

So, Option (C) is correct answer.