Question

Adelphi Company provides the following information for their first year of operations in 2018:

            Sales, 8,000 units @ $19 each

            Total production, 12,000 units

Production costs per unit:

         Direct materials            $4.00

                     Direct labor                   $3.00

                     Variable overhead        $1.00

            Fixed manufacturing overhead      $9,000

Adelphi Company uses absorption costing. Use this information to determine for Adelphi Company the FY 2018 Cost of Goods Sold. (Round & enter final answer to the nearest whole dollar)

Answer 1

Answer:

Given data:

• Sales = 8000 u
• Total production = 12,000 u
• Direct material = $ 4 per unit
• Direct labor = $ 3 per unit
• Variable overhead = $ 1 per unit
• Fixed overhead = $ 9,000

Calculation of cost of goods sold under absorption costing :

Particulars	Amount	Amount
Direct material	= 8,000 * $ 4 = $ 32,000	$ 32,000
Direct labor	=  8,000 * $ 3 = $ 24,000	$ 24,000
Variable overhead	= 8,000 * $ 1 = $ 8,000	$ 8,000
Fixed overhead	= ($ 9,000 / 12,000)* 8,000 = 0.75*8000 = $ 6,000	$ 6,000
Cost of goods sold	=$ 32,000+$ 24,000+$ 8,000+$ 6,000 = $ 70,000	$ 70,000