The following information refers to the Cowan Company's past year of operations.
*Common overhead totals $50,000 and is divided equally between the two products.
**Common fixed selling totals $60,000 and is divided equally between the two products.
Budgeted fixed overhead for the year of $180,000 equalled actual fixed overhead. Fixed overhead is assigned to products using a plant-wide rate based on expected direct labour hours, which were 150,000. The company had 5,000 of Product B in inventory at the beginning of the year. These units had the same unit cost as the units produced during the year.
-Using absorption costing, cost of goods sold for the year is
A) $1,050,000.
B) $912,000.
C) $797,000.
D) $760,000.

Question

The following information refers to the Cowan Company's past year of operations.
    *Common overhead totals $50,000 and is divided equally between the two products.
**Common fixed selling totals $60,000 and is divided equally between the two products.
Budgeted fixed overhead for the year of $180,000 equalled actual fixed overhead. Fixed overhead is assigned to products using a plant-wide rate based on expected direct labour hours, which were 150,000. The company had 5,000 of Product B in inventory at the beginning of the year. These units had the same unit cost as the units produced during the year.
-Using absorption costing, cost of goods sold for the year is
A) $1,050,000. 
B) $912,000. 
C) $797,000. 
D) $760,000.

Quizplus · Accepted Answer

Absorption costing includes all manufacturing costs (fixed and variable) in the cost of goods sold. The correct answer is $1,050,000, which likely includes all these costs.

The Following Information Refers to the Cowan Company's Past Year