Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows:
Hi-Tech started March with 1,000 cell phones that had variable costs of $28 per phone and fixed manufacturing costs of $2 per phone. Hi-Tech uses a FIFO cost flow.
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What is the Cost of Goods Sold for March, 2012 using absorption costing?
A) $1,320,000
B) $1,240,000
C) $1,317,000
D) $1,237,000

Question

Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows:
 Hi-Tech started March with 1,000 cell phones that had variable costs of $28 per phone and fixed manufacturing costs of $2 per phone. Hi-Tech uses a FIFO cost flow.
-
What is the Cost of Goods Sold for March, 2012 using absorption costing?
A) $1,320,000 
B) $1,240,000 
C) $1,317,000 
D) $1,237,000

Quizplus · Accepted Answer

Absorption costing includes all manufacturing costs, both variable and fixed, in the cost of a product. The specific calculation for Cost of Goods Sold (COGS) under absorption costing would require details such as the beginning inventory, production costs (including direct materials, direct labor, and both variable and fixed manufacturing overheads), and ending inventory. Without these details, it's not possible to provide a step-by-step calculation. However, given the options, the correct answer is chosen based on the information provided in the question.

Hi-Tech Manufactures Basic Cell Phones for Cell Phone Service Providers