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18 April, 11:14

Carr Company produces a single product. Last year, Carr manufactured 27,120 units and sold 21,800 units. Production costs for the year were as follows: Fixed manufacturing overhead $461,040 Variable manufacturing overhead $208,824 Direct labor $124,752 Direct materials $222,384Sales were $915,600, for the year, variable selling and administrative expenses were $128,620, and fixed selling and administrative expenses were $197,976. There was no beginning inventory. Assume that direct labor is a variable cost. Under absorption costing, the ending inventory for the year would be valued at: (Do not round intermediate calculations.) (A) $269,500 (B) $261,000 (C) $227,000 (D) $199,500

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  1. 18 April, 11:24
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    The direct labor is a variable cost. Under absorption costing, the ending inventory for the year would be valued 199500

    Explanation:

    product per unit = Total cost / number of units produced

    = (222384+124752+208824+461040) / 27120

    = 1017000 / 27120

    product per unit = $ 37.5 per car

    Ending inventory = (27120 - 21800) * 37.5

    = 5320 * 37.5

    Ending inventory = 199500
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