Question

Assumes Tiger Company had 60 units in beginning Finished Goods Inventory and sold 1,200 units. Additional data includes: • Units produced 1,300 units • Direct materials $13 per unit • Direct labor 9 per unit • Variable manufacturing overhead 3 per unit • Fixed manufacturing overhead 8 per unit Using absorption costing, what is the dollar amount of ending Finished Goods Inventory? a) $5,280 b) $4,000 c) $3,740 d) $800

Answer 1

option A

Explanation:

given,

beginning finished good = 60 units

sold goods = 1200

unit produced = 1,300 units

direct material cost = $ 13 per unit

direct labor = $9 per unit

Fixed manufacturing overhead = $8 per unit

Variable manufacturing overhead = $3 per unit

Absorption cost = direct materials + direct labor + variable manufacturing overhead + fixed manufacturing overhead per unit

= 13 + 9 + 3 + 8

= $ 33 per unit

Finished Goods Inventory

= beginning finished goods + units produced - units sold

= 60 + 1300 - 1200

= 160 units

Amount of finished good

= 160 × $ 33

= $ 5,280

the correct answer is option A