Question

19.1

Trio Company reports the following information for the current year, which is its first year of operations. Direct materials Direct labor Variable overhead Fixed overhead Units produced this year Units sold this year Ending finished goods inventory in units $15 per unit $16 per unit $ 4 per unit $160,000 per year 20,000 units 14,000 units 6,000 units 1. Compute the product cost per unit using absorption costing. Check (1) Absorption cost per unit, $43 2. Determine the cost of ending finished goods inventory using absorption costing. 3. Determine the cost of goods sold using absorption costing.

Answer 1

1) Unit product cost using absorption costing

Direct material	15
Direct labor	16
variable overhead	4
Fixed overhead (160000/20000)	8
Unit product cost	43

2) Cost of ending finished goods = (20000-14000)*43 = 258000

3) Cost of goods sold = 14000*43 = 602000