Carr Company produces a single product. Last year, Carr manufactured 35,040 unit
ID: 2427833 • Letter: C
Question
Carr Company produces a single product. Last year, Carr manufactured 35,040 units and sold 29,600 units. Production costs for the year were as follows: Fixed manufacturing overhead $385,440 Variable manufacturing overhead $297,840 Direct labor $157,680 Direct materials $266,304 Sales were $1,450,400, for the year, variable selling and administrative expenses were $156,880, and fixed selling and administrative expenses were $255,792. There was no beginning inventory. Assume that direct labor is a variable cost. Under absorption costing, the ending inventory for the year would be valued at:
Explanation / Answer
Cost per unit produced Cost/35040 Produced 35040 Sold 29600 Ending Inventory 5440 Sales $1,450,400 Direct material $266,304 $7.60 Direct labour 157680 $4.50 Fixed manufacturing Overhead $385,440 $11.00 variable Manufacturing Overhead 297840 $8.50 Manfacturing cost per unit $31.60 Ending inventory units 5440 Cost of Ending Inventory $171,904.00 Ans Note in cost of ending inventory selling and adminitrative cost is not included as it is not considered product cost Variable Selling & Administrative Expense 156880 Fixed Selling & Administrative Expense $255,792