Question

# Adelphi Company provides the following information for their first year of operations in 2018:             Sales, 9,000...

Adelphi Company provides the following information for their first year of operations in 2018:

Sales, 9,000 units @ \$17 each

Total production, 13,000 units

Production costs per unit:

Direct materials            \$2.00

Direct labor                   \$4.00

Adelphi Company uses absorption costing. Use this information to determine for Adelphi Company the FY 2018 Cost of Goods Sold. (Round & enter final answer to the nearest whole dollar)

 Cost of goods sold 69,231

Calculation:

To calculate the cost of goods sold, first we need to compute the per unit costs and then multiply with the number of units sold.

The variable costs per unit is:

 Direct Materials 2 Direct Labor 4 Variable manufacturing overhead 1 Total variable costs per unit 7

Fixed cost per unit = Fixed cost/ No of units produced = 9,000 / 13,000 = 0.692

So, the Total cost per unit = Total variable costs per unit + Fixed cost per unit = 7 + 0.692 = 7.692

To calculate the cost of goods sold, we need to multiply it with the number of units sold.

Cost of goods sold = Total cost per unit x Number of units sold = 7.692 x 9,000 = 69,231

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