Harris Corporation produces a single product.Last year, Harris manufactured 17, 000 units and sold 13, 000 units.Production costs for the year were as follows: Sales were $780, 000 for the year, variable selling and administrative expenses were $88, 400, and fixed selling and administrative expenses were $170, 000.There was no beginning inventory.Assume that direct labor is a variable cost. Under absorption costing, the ending inventory for the year would be valued at:
A)$190, 800
B)$170, 000
C)$230, 800
D)$0

Question

Harris Corporation produces a single product.Last year, Harris manufactured 17, 000 units and sold 13, 000 units.Production costs for the year were as follows:  Sales were $780, 000 for the year, variable selling and administrative expenses were $88, 400, and fixed selling and administrative expenses were $170, 000.There was no beginning inventory.Assume that direct labor is a variable cost. Under absorption costing, the ending inventory for the year would be valued at:
A)$190, 800 
B)$170, 000 
C)$230, 800 
D)$0

Quizplus · Accepted Answer

Units in ending inventory = Units in beginning inventory + Units produced - Units sold
= 0 + 17, 000 units - 13, 000 units = 4, 000 units
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Harris Corporation Produces a Single Product