Ohio Company provided the following information regarding its only product--ice skates. $\begin{array}{lr}
\text { Direct materials used } & \$ 300,000 \
\text { Direct labor } & 80,000 \
\text { Fixed overhead } & 100,000 \
\text { Fixed selling and administrative costs } & 170,000 \
\text { Variable overhead } & 20,000 \
\text { Variable selling and administrative } & 90,000 \
\text { Selling unit price } & 99 \\
\text { Units produced and sold } & 12,000
\end{array}$ _____ is the total manufacturing cost if the absorption approach is used.
A)$280,000
B)$300,000
C)$360,000
D)$500,000

Question

Quizplus · Accepted Answer

The total manufacturing cost under the absorption approach includes direct materials, direct labor, variable overhead, and fixed overhead. Thus, it is $300,000 (direct materials) + $80,000 (direct labor) + $20,000 (variable overhead) + $100,000 (fixed overhead) = $500,000.

Ohio Company Provided the Following Information Regarding Its Only Product--Ice