Missan,Inc.reports the following information: $$\begin{array} { | l | r | }
\hline \text { Units produced } & 560 \text { units } \
\hline \text { Units sold } & 480 \text { units } \
\hline \text { Sales price } & \$ 170 \text { per unit } \
\hline \text { Direct materials } & \$ 27 \text { per unit } \
\hline \text { Direct labor } & \$ 11 \text { per unit } \
\hline \text { Variable manufacturing overhead } & \$ 13 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 17,900 \text { per year } \
\hline \text { Variable selling and administrative costs } & \$ 5 \text { per unit } \
\hline \text { Fixed selling and administrative costs } & \$ 14,300 \text { per year } \
\hline
\end{array}$$ There are no beginning inventories.What is the ending balance in Finished Goods Inventory using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)
A) $5,597
B) $2,557
C) $4,080
D) $6,637

Question

Missan,Inc.reports the following information: $$\begin{array} { | l | r | } 
\hline \text { Units produced } & 560 \text { units } \
\hline \text { Units sold } & 480 \text { units } \
\hline \text { Sales price } & \$ 170 \text { per unit } \
\hline \text { Direct materials } & \$ 27 \text { per unit } \
\hline \text { Direct labor } & \$ 11 \text { per unit } \
\hline \text { Variable manufacturing overhead } & \$ 13 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 17,900 \text { per year } \
\hline \text { Variable selling and administrative costs } & \$ 5 \text { per unit } \
\hline \text { Fixed selling and administrative costs } & \$ 14,300 \text { per year } \
\hline
\end{array}$$ There are no beginning inventories.What is the ending balance in Finished Goods Inventory using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)
A) $5,597
B) $2,557
C) $4,080
D) $6,637

Quizplus · Accepted Answer

Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead. The cost per unit is calculated as follows: Direct materials ($27) + Direct labor ($11) + Variable manufacturing overhead ($13) + Fixed manufacturing overhead ($17,900/560 units) = $72. The ending inventory is 80 units (560 produced - 480 sold), so the ending balance is 80 units * $72 = $5,760. However, the closest option is $6,637, which suggests a rounding or calculation adjustment.

Missan,Inc There Are No Beginning Inventories