13). Befuddled But Brilliant Old Professor Mullen\'s Gourmet Food Company sells

Question

13). Befuddled But Brilliant Old Professor Mullen's Gourmet Food Company sells its product for $60 per unit. During 2017, it produced 60,000 units and sold 50,000 units (there was no beginning inventory or BI= 0). Costs per unit are: direct materials (DM) $15, direct labor (DL) $9, and variable overhead (VOH) $3. Fixed costs are: $720,000 (FOB) manufacturing overhead, and $90,000 (S&A) selling and administrative expenses. Cost of goods (CGS) sold under absorption costing (ABS) is

A) $1,350,000.

B) $1,620,000.

C) $1,950,000.

D) $1,560,000.

Explanation / Answer

Calculate cost of goods sold under absorption :

So answer is c) $1950000

Direct material 15 Direct labour 9 Variable overhead 3 Fixed manufacturing overhead (720000/60000) 12 Unit product cost 39 Sale unit 50000 Cost of goods sold under absorption 1950000

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