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Solution Library
Calculate Inventory Using Absorption Costing
Question
DeAnne Company produces a single product. The company's variable costing income statement for August appears below:
|
DeAnne Company |
|
|
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Sales ($20 per unit) |
$ 802,000 |
|
|
Variable expenses: |
||
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Variable cost of goods sold |
521,300 |
|
|
Variable selling expense |
80,200 |
|
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Total variable expenses |
601,500 |
|
|
Contribution margin |
200,500 |
|
|
Fixed expenses: |
||
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Fixed manufacturing |
142,880 |
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Fixed selling and administrative |
35,720 |
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Total fixed expenses |
178,600 |
|
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Net operating income |
$ 21,900 |
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The company produced 35,720 units in August and the beginning inventory consisted of 8,340 units. Variable production costs per unit and total fixed costs have remained constant over the past several months. Under absorption costing, the ending inventory for the month ended August 31 would be reported at:
a. $51,480
b. $75,240
c. $67,320
d. $80,240
Summary
The question belongs to Accounting and it discusses about calculation of month end inventory using absorption costing.
Total Word Count 33
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