Thanks Wolanski Corporation has provided the following data for its most recent

Question

Thanks

Wolanski Corporation has provided the following data for its most recent year of operations:

Which of the following statements is true?

A The amount of fixed manufacturing overhead released from inventories is $248,000

B The amount of fixed manufacturing overhead deferred in inventories is $248,000

C The amount of fixed manufacturing overhead deferred in inventories is $30,000

Selling price per unit $48 Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials $11 Direct labor $5 Variable manufacturing overhead $5 Fixed manufacturing overhead per year $110,000 Selling and administrative expenses: Variable selling and administrative expense per unit sold $4 Fixed selling and administrative expense per year $71,000

Explanation / Answer

ANSWER:

C The amount of fixed manufacturing overhead deferred in inventories is $30,000

Under absorption or full costing,ending inventories are valued including the fixed manufacturing overheads,that way,deferring some amount of the mfg.OHs .So, COGS during the period reduces & gross profit increases-- than under variable or direct costing.

Here,

total fixed mfg.OH for 11000 units= 110000

Ending inventory= 3000 units

So, Fixed mfg.OH deferred in the 3000 units of E/I = 110000/11000*3000= 30000

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