Question

ABC Manufacturing has the following cost structure:         Direct material (DM) per unit (DM/u)      $4 Direct Labor (DL)...

  1. ABC Manufacturing has the following cost structure:        

Direct material (DM) per unit (DM/u)      $4

Direct Labor (DL) per unit (DM/u $6

Variable manufacturing overhead (VMO) per unit (VMO/u)       $2

Fixed manufacturing overhead per year  $10,000

Fixed selling and administrative expenses           $20,000

Assume                               

units produced                  10,000

units sold                           8,000

Using absorption costing, find total manufacturing costs for units sold

  1. $84,000
  2. $92,000
  3. $96,000
  4. between $102,000 and $105,000
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Answer #1

Correct answer----------(d) between $102,000 and $105,000

.

The exact answer for Cost of goods sold is $104,000 as shown below

Direct material (DM) per unit $               4.00
Direct Labor (DL) per unit $               6.00
Variable manufacturing overhead (VMO) per unit $               2.00
Fixed manufacturing cost ($10,000/10,000) $ 1.00
Total cost per unit $            13.00
Total units sold 8000
Cost of goods sold $ 104,000.00
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