Calculate Inventory Using Absorption Costing

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Question

DeAnne Company produces a single product. The company's variable costing income statement for August appears below:

DeAnne Company Income Statement For the month ended August 31
Sales ($20 per unit)	$ 802,000

Variable expenses:
Variable cost of goods sold	521,300
Variable selling expense	80,200

Total variable expenses	601,500

Contribution margin	200,500

Fixed expenses:
Fixed manufacturing	142,880
Fixed selling and administrative	35,720

Total fixed expenses	178,600

Net operating income	$ 21,900

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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