Question

The following information is available for Barnes Company for the fiscal year ended December 31: Beginning finished goods inventory in units 0 Units produced 7,800 Units sold 5,500 Sales $ 1,100,000 Materials cost $ 156,000 Variable conversion cost used $ 78,000 Fixed manufacturing cost $ 702,000 Indirect operating costs (fixed) $ 110,000 The absorption costing operating income is:

Answer 1

See below

Step-by-step explanation:

Material cost

$156,000

Add:

Variable conversion cost used

$78,000

Add:

Fixed manufacturing cost

$702,000

Total manufacturing cost

$936,000

Unit product cost

= Total manufacturing cost / Units produced

= $936,000/7,800

= $120

Ending inventory in unit produced

= Units produced - Units sold

= 7,800 - 5,500

= 2,300 units

Ending inventory under absorption costing

= 2,300 units × $120

= $276,000