Question

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

                     Variable overhead        $1.00

            Fixed manufacturing overhead      $9,000

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)

Your Answer:

Answer 1

Answer:

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