Question

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

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