Gordon Company produces a single product that sells for $10 per unit. Last year, there were no beginning inventories, 100,000 units were produced, and 80,000 units were sold. The company has the following cost structure:

-Under absorption costing,what was the carrying value on the balance sheet of the ending finished goods inventory?

Question

Gordon Company produces a single product that sells for $10 per unit. Last year, there were no beginning inventories, 100,000 units were produced, and 80,000 units were sold. The company has the following cost structure:

-Under absorption costing,what was the carrying value on the balance sheet of the ending finished goods inventory?

Quizplus · Accepted Answer

Under absorption costing, the carrying value of ending finished goods inventory includes both variable and fixed manufacturing costs. The correct value is $104,000.

Gordon Company Produces a Single Product That Sells for $10