Question

Trio Company reports the following information for the current year, which is its first year of operations.

Direct materials	$	13	per unit
Direct labor	$	19	per unit
Overhead costs for the year
Variable overhead	$	45,000	per year
Fixed overhead	$	90,000	per year
Units produced this year		22,500	units
Units sold this year		16,500	units
Ending finished goods inventory in units		6,000	units
Compute the product cost per unit using absorption costing. Cost per unit of finished goods using: Absorption costing Fixed overhead per unit Direct materials per unit Variable overhead per unit Direct labor per unit Cost per unit of finished goods Determine the cost of ending finished goods inventory using absorption costing. Cost per unit of finished goods using: Absorption costing Number of units in finished goods Total cost of finished goods inventory Determine the cost of goods sold using absorption costing. Absorption costing Cost per unit of goods sold using Number of units in sold goods Total cost of sold goods

Answer 1

1. Computation of the Product Cost Per Unit using Absorption Costing: 13.00 19.00 A Direct Materials Cost Per Unit Direct Labor Cost Per Unit Variable Overhead Cost Per Unit ($45000/22500) Fixed Overhead Cost Per Unit ($90000/22500) Cost Per Unit 2.00 4.00 38.00

2. Determination of Cost of Ending Finished Goods Inventory using Absorption Costing: Units Produced Less: Units Sold Ending Finished Goods Inventory 22500 -16500 6000 Cost Per Unit Under Absorption Costing $ 38.00 Cost of Ending Finished Goods Inventory (6000 Units x $38) 228,000.00 3. Determination of Cost of Goods Sold using Absorption Costing: Units Sold Cost Per Unit under Absorption Costing 16500 38.00 Cost of Goods Sold (16500 x $38) 627,000.00