Selling price per unit $225.00
Sales $360,000
Direct materials used $176,000
Direct labor $100,000
Variable factory overhead $44,000
Fixed factory overhead $80,000
Variable selling and administrative expenses $20,000
Fixed selling and administrative expenses $10,000
Production volume variance 0
Ending inventory, Direct Materials 0
Ending inventory, Work-in-process 0
Ending inventory, Finished Goods 400 units
Under absorption costing, what is the Cost of Goods Sold?
A) $256,000
B) $272,000
C) $320,000
D) $360,000
Sales = $360,000
Selling price per unit = $225
Number of units sold = Sales / Selling price per unit
= 360,000/225
= 1,600 units
Ending inventory = 400 units
Number of units produced = Number of units sold + Ending inventory
= 1,600+400
= 2,000 units
Cost of ending inventory = Cost of production x Ending inventory/ Number of units produced
= 400,000 x 400/2,000
= $80,000
Calculation of Cost of Goods sold under Absorption Costing | |
Direct materials | $176,000 |
Direct labor | 100,000 |
Variable factory overhead | 44,000 |
Fixed factory overhead | 80,000 |
Cost of production | $400,000 |
Cost of ending inventory | -80,000 |
Cost of goods sold | $320,000 |
The cost of goods sold = $320,000
Correct option is C.
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