Sanchez Company has no beginning and ending inventories, and reports the followi

Question

Sanchez Company has no beginning and ending inventories, and reports the following data about its only product:

Direct materials used                                             $100,000

Direct labor                                                                  $80,000

Fixed indirect manufacturing                              $100,000

Fixed selling and administrative                        $170,000

Variable indirect manufacturing                          $20,000

Variable selling and administrative                    $90,000

Selling price(per unit)                                                     $100

Units produced and sold                                           12,000

Sanchez Company uses the absorption approach to prepare the income statement. What is the manufacturing cost of goods sold?

A) $270,000

B) $300,000

C) $390,000

D) $500,000

Explanation / Answer

Manufacturing cost of goods sold: Direct materials used 100000 Direct labor   80000 Fixed indirect manufacturing 100000 Variable indirect manufacturing   20000 Total 300000 Option B is correct

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