Answer the following questions using the information below:
Jupiter Corporation incurred fixed manufacturing costs of $16,000 during 2015. Other information for 2015 includes:
The budgeted denominator level is 2,000 units.
Units produced total 2,200 units.
Units sold total 1,900 units.
Variable cost per unit is $4.
Beginning inventory is zero.
The fixed manufacturing cost rate is based on the budgeted denominator level.
-Under absorption costing,fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total ________.
A) $26,400
B) $22,800
C) $24,000
D) $21,818

Question

Quizplus · Accepted Answer

Under absorption costing, fixed manufacturing costs are included in the cost of goods sold. The fixed manufacturing cost rate is calculated by dividing the total fixed manufacturing costs by the budgeted denominator level. Thus, the fixed manufacturing cost rate is $8 per unit ($16,000 ÷ 2,000 units).

The cost of goods sold under absorption costing is calculated as follows:
Variable cost per unit = $4
Fixed manufacturing cost per unit = $8
Total manufacturing cost per unit = $12
Cost of goods sold = Total manufacturing cost per unit × Units sold
Cost of goods sold = $12 × 1,900 units
Cost of goods sold = $22,800

Therefore, the correct answer is B.

Answer the Following Questions Using the Information Below