Stiller Corporation incurred fixed manufacturing costs of $24,000 during 2015. Other information for 2015 includes:
The budgeted denominator level is 2,000 units.
Units produced total 1,500 units.
Units sold total 1,200 units.
Beginning inventory was zero.
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold.
-Fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total ________.
A) $14,400
B) $19,200
C) $24,000
D) 0

Question

Quizplus · Accepted Answer

Fixed manufacturing costs expensed on the income statement are based on the budgeted denominator level, not the actual level of production. The budgeted denominator level is 2,000 units, so the fixed manufacturing cost rate is $24,000 / 2,000 units = $12 per unit. The fixed manufacturing costs expensed on the income statement are $12 per unit x 1,200 units sold = $14,400.

Stiller Corporation Incurred Fixed Manufacturing Costs of $24,000 During 2015