Freetown Corporation incurred fixed manufacturing costs of $26,000 during 2017.Other information for 2017 includes:
The budgeted denominator level is 2,800 units.
Units produced total 1,500 units.
Units sold total 1,300 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 ________.(Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar. )
A)$12,077
B)$22,533
C)$26,000
D)$0

Question

Freetown Corporation incurred fixed manufacturing costs of $26,000 during 2017.Other information for 2017 includes:
The budgeted denominator level is 2,800 units. 
Units produced total 1,500 units.
Units sold total 1,300 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 ________.(Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar. )
A)$12,077
B)$22,533
C)$26,000
D)$0

Quizplus · Accepted Answer

Under absorption costing, fixed manufacturing costs are allocated to units produced. The fixed manufacturing cost rate is $26,000 / 2,800 units = $9.29 per unit. For the 1,300 units sold, the fixed manufacturing costs expensed are 1,300 units * $9.29 = $12,077.

Freetown Corporation Incurred Fixed Manufacturing Costs of $26,000 During 2017