What is the Car Tune's September cost of goods sold amount if absorption costing is used?

Question

Quizplus · Accepted Answer

To calculate the cost of goods sold using absorption costing, we need to include both variable and fixed manufacturing overhead costs. The total manufacturing overhead cost per unit can be calculated as follows:

Total manufacturing overhead cost per unit = Total manufacturing overhead cost / Total number of units produced

= $180,000 / 12,000 units

= $15 per unit

Therefore, the cost of goods sold for September using absorption costing would be:

Cost of goods sold = Beginning inventory + Purchases - Ending inventory

= ($50,000 x $20) + ($200,000 x $25) - ($80,000 x $15)

= $1,000,000 - $1,200,000 + $1,200,000

= $270,000

What Is the Car Tune's September Cost of Goods Sold