During its first year of operations,Carlos Manufacturing Corporation incurred the following costs to produce 8,000 units of its only product: The company also incurred the following costs in selling 7,500 units of product during its first year: Assume that direct labor is a variable cost. Under absorption costing,what is the total cost that would be assigned to Carlos' finished goods inventory at the end of the first year of operations?
A)$15,000
B)$42,125
C)$44,000
D)$47,125

Question

During its first year of operations,Carlos Manufacturing Corporation incurred the following costs to produce 8,000 units of its only product:  The company also incurred the following costs in selling 7,500 units of product during its first year:  Assume that direct labor is a variable cost. Under absorption costing,what is the total cost that would be assigned to Carlos' finished goods inventory at the end of the first year of operations?
A)$15,000 
B)$42,125 
C)$44,000 
D)$47,125

Quizplus · Accepted Answer

Unit product cost under absorption costing:
 11eaa3fe_32c0_8644_908b_573f2f624f81_TB2461_00 Units in ending inventory = Units in beginning inventory + Units produced - Units sold
= 0 units + 8,000 units - 7,500 units = 500 units
Value of ending finished goods inventory = $84.25 per unit × 500 units = $42,125

During Its First Year of Operations,Carlos Manufacturing Corporation Incurred the Following