Question

Carr Company produces a single product. Last year, Carr manufactured 27,120 units and sold 21,800 units. Production costs for the year were as follows: Fixed manufacturing overhead $461,040 Variable manufacturing overhead $208,824 Direct labor $124,752 Direct materials $222,384Sales were $915,600, for the year, variable selling and administrative expenses were $128,620, and fixed selling and administrative expenses were $197,976. 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: (Do not round intermediate calculations.)(A) $269,500(B) $261,000(C) $227,000(D) $199,500

Answer 1

The direct labor is a variable cost.Under absorption costing, the ending inventory for the year would be valued 199500

Explanation:

product per unit = Total cost /number of units produced

= (222384+124752+208824+461040) / 27120

= 1017000/ 27120

product per unit = $ 37.5 per car

Ending inventory = (27120- 21800) *37.5

= 5320 *37.5

Ending inventory= 199500