Question

Barry's Hobbies produces and sells a luxury animal pillow for $80.00 per unit. In the first month of operation, 3,000 units were produced and 2,250 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs $38 per unit Variable marketing costs $ 2 per unit Fixed manufacturing costs $60,000 per month Administrative expenses, all fixed $12,000 per month Ending inventories: Direct materials -0- WIP -0- Finished goods 750 units What is cost of goods sold per unit when using absorption costing?A. $40 B. $58 C. $38 D. $64

Answer 1

Answer:

The correct answer is B.

Explanation:

Giving the following information:

In the first month of operation, 3,000 units were produced and 2,250 units were sold.

Actual fixed costs are the same as the amount budgeted for the month.

Other information for the month includes:

Variable manufacturing costs $38 per unit

Variable marketing costs $ 2 per unit

Fixed manufacturing costs $60,000 per month

Administrative expenses, all fixed $12,000 per month

Finished goods 750 units

Absorption costing= variable manufacturing costs + fixed overhead

Absorption costing= 38 + (60,000/3,000)= $58

Cost of goods sold= 58*2,250= $130,500