Financial& Managerial Accounting: Information for Decisions-Wild, Shaw, Chiappet

Question

Financial& Managerial Accounting: Information for Decisions-Wild, Shaw, Chiappetta, 7e, Variable Costing and Analysis Trio Company report the following information for the current year, which is ito firot year of operations Direct materials Direct labor Overhead costs for the year $15 per unit $16 per unit 80,000 per year Variable overhead Fixed overhead $160,000 per year Units produced this year Units sold this year Ending finished goods inventory in units 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

Explanation / Answer

Answer:

Absorption costing Amount $ Direct Materials per unit 15.00 Direct Labor per unit 16.00 Variable Overhead per unit (80,000/20,000) 4.00 Fixed Overhead per unit (160,000/20,000) 8.00 1. Product cost per unit (Total of above costs) 43.00 2. Cost of finished goods inventory (6000*43) 258,000.00 3. Cost of goods sold (14,000 *43) 602,000.00

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