Exhibit 5-7
Last month,Ellison Industries sold its product for $100 per unit.Fixed production costs were $50,000,and variable production costs amounted to $21 per unit.Fixed selling and administrative costs totaled $20,000,and variable selling and administrative costs amount to $3.00 per unit.Dawson produced and sold 6,000 units last month.
-Refer to Exhibit 5-7.Which of the following amounts represents total cost of goods sold?
A)$176,000
B)$126,000
C)$164,000
D)$424,000
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

Total cost of goods sold is the sum of fixed production costs and variable production costs. Fixed production costs are $50,000 and variable production costs are $21 per unit. Dawson produced and sold 6,000 units last month, so variable production costs are $21 * 6,000 = $126,000. Therefore, total cost of goods sold is $50,000 + $126,000 = $176,000.

Exhibit 5-7 Last Month,Ellison Industries Sold Its Product for $100 Per Unit.Fixed