Question

Trio Company reports the following information for the current year, which is its first year of...

Trio Company reports the following information for the current year, which is its first year of operations.

Direct materials $ 15 per unit
Direct labor $ 16 per unit
Overhead costs for the year
Variable overhead $ 75,000 per year
Fixed overhead $ 150,000 per year
Units produced this year 25,000 units
Units sold this year 19,000 units
Ending finished goods inventory in units 6,000 units

1. Compute the product cost per unit using absorption costing

2. Determine the cost ending finished goods inventory using absorption costing.

3. Determine the cost of goods sold using absorption costing.

Homework Answers

Answer #1

1.

Direct material 15
Direct labor 16
Variable overhead (75,000/25,000) 3
Fixed overhead (150,000/25,000) 6
Product cost per unit $40

2.

Ending finished goods inventory = 6,000 units

Cost of ending finished goods inventory = Ending finished goods inventory x cost per unit

= 6,000 x 40

= $240,000

3.

Number of units sold = 19,000 units

Cost of goods sold = Number of units sold x Cost per unit

= 19,000 x 40

= $760,000

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