Answer:
The correct answer is $112,000
Explanation:
First of all, let us lay out the information given:
Direct materials = $170,000
Direct Labor = $230,000
Manufacturing overhead = $160,000
Cost of production = Direct material + Direct Labor + Manufacturing overhead = 170,000 + 230,000 + 160,000 = $560,000
Number of units produced = 5000 units
Number of units sold = 4000 units
Number of units left on hand = 5000 - 4000 = 1000 units (units produced - units sold)
Next, we will calculate the cost of production of a single unit of finished product as follows:
5000 units = $560,000
∴ 1 unit = 560,000 ÷ 5000 = 112
Finally, since the number of unit on hand is 1,000 units, we will find the cost of unit on hand as follows
1 unit = $112
∴ 1000 unit = 112 × 1000 = $112,000
