Cahalane Corporation has provided the following data for its two most recent years of operation:
| Selling price per unit | $ | 91 |
| Manufacturing costs: | ||
| Variable manufacturing cost per unit produced: | ||
| Direct materials | $ | 12 |
| Direct labor | $ | 5 |
| Variable manufacturing overhead | $ | 5 |
| Fixed manufacturing overhead per year | $ | 432,000 |
| Selling and administrative expenses: | ||
| Variable selling and administrative expense per unit sold | $ | 4 |
| Fixed selling and administrative expense per year | $ | 78,000 |
| Year 1 | Year 2 | |
| Units in beginning inventory | 0 | 1,000 |
| Units produced during the year | 9,000 | 12,000 |
| Units sold during the year | 8,000 | 10,000 |
| Units in ending inventory | 1,000 | 3,000 |
Which of the following statements is true for Year 2
Multiple Choice
The amount of fixed manufacturing overhead deferred in inventories is $60,000
The amount of fixed manufacturing overhead released from inventories is $60,000
The amount of fixed manufacturing overhead deferred in inventories is $592,000
The amount of fixed manufacturing overhead released from inventories is $592,000
| unit product cost | |||||||
| year 1 | year 2 | ||||||
| Direct materials | 12 | 12 | |||||
| direct labor | 5 | 5 | |||||
| variable manufacturing overhead | 5 | 5 | |||||
| Fixed ovehread (432000/production units) | 48 | 36 | |||||
| unit product cost | 70 | 58 | |||||
| fixed overhead deferred (1000*48) | 48000 | ||||||
| fixed overhead released | -48000 | ||||||
| fixed overhead deferred (3000*36) | 108000 | ||||||
| net | 48000 | 60000 | |||||
| answer: | the statement true is | ||||||
| the amount of fixed overhead deferred in inventories is $60,000 | |||||||
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