Delvin Corporation, which has only one product, has provided the following data

ID: 2484921 • Letter: D

Question

Delvin Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price………$120

Units in beginning inventory…….0

Units produced…..1800

Units sold…..1500

Units in ending inventory……….300

Variable costs per unit:

Direct materials………..$40

Direct labor………..$42

Variable manufacturing overhead………$2

Variable selling and admin………$9

Fixed costs:

Fixed manufacturing overhead………$7,200

Fixed selling and admin…………$28,500

What is the total period cost for the month under the absorption costing?

$42,000

$7,200

$49,200

$28,500

Please show all work

$42,000

$7,200

$49,200

$28,500

Please show all work

The correct answer is $ 42,000

Under absorption costing, all manufacturing costs are product costs, whereas all non-manufacturing costs are period costs.

In the given question, there are two categories of non-manufacturing costs- Variable selling and admin, and Fixed selling and admin.

Total variable selling and admin costs = $ 9 x 1,500 = $ 13,500

Fixed selling and admin. costs = $ 28,500

Total selling and admin costs = $ ( 13,500 + 28,500) = $ 42,000

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