Question

Brock Company makes candy. During the most recent accounting period Brock paid $3,000 for raw materials, $4,000 for labor, and $2,000 for overhead costs that were incurred to make candy. Brock started and completed 10,000 units of candy of which 8,000 were sold. Based on this information the balance in the inventory account on Brock’s balance sheet would be
A. $1,800.
B. $2,000.
C. $9,000.
D. None of the above.

Answer 1

Answer:

A. $ 1.800

Explanation:

The total manufacturing costs for the period are:

Raw materials                                         $  3,000

Labor                                                       $  4.000

Overhead costs                                      $  2,000

Total cost of goods manufactured       $  9,000

Units started and completed                   10,000

Cost per unit $ 9,000 / 10,000 units    $     0.90 per unit

Units inventory at end of period               2,000

Inventory value at period end $ 0.90 * 2,000 = $ 1,800