Couric Company reported the following information about the production and sale of its only product during the first month of operations:
$\begin{array}{ll}
\text { Selling price per unit } & \$ 117,00 \
\text { Sales } & \$ 117,000 \
\text { Direct materials used } & \$ 37,500 \
\text { Direct labor } & \$ 63,000 \
\text { Variable factory overhead } & \$ 25,500 \
\text { Fixed factory overhead } & \$ 80,000 \
\text { Variable selling and administrative expenses } & \$ 4,500 \
\text { Fixed selling and administrative expenses } & \$ 7,500 \
\text { Units produced } & 2,000 \text { units } \
\text { Units sold } & 1,000 \text { units } \
\text { Production volume variance } & \$ 0
\end{array}$
Under absorption costing,what is the Cost of Goods Sold?
A) $63,000
B) $103,000
C) $126,000
D) $206,000

Question

Quizplus · Accepted Answer

Under absorption costing, fixed factory overhead is included in the cost of goods sold. The cost of goods sold is calculated as follows:Direct materials used + Direct labor + Variable factory overhead + Fixed factory overhead = Cost of goods sold$37,500 + $63,000 + $25,500 + $80,000 = $206,000

Couric Company Reported the Following Information About the Production and Sale