Using the absorption method,cost of goods manufactured for the year is:
A) $450,000
B) $550,000
C) $660,000
D) $900,000

Question

Using the absorption method,cost of goods manufactured for the year is:
A) $450,000 
B) $550,000 
C) $660,000 
D) $900,000

Quizplus · Accepted Answer

The absorption method takes into account both variable and fixed manufacturing costs, including direct materials, direct labor, and factory overhead. Based on the given data, direct materials cost for the year is $200,000, direct labor cost is $150,000, and factory overhead cost is $310,000 ($70,000 + $30,000 + $80,000 + $50,000 + $80,000). Thus, the total manufacturing cost for the year (cost of goods manufactured) is $660,000 (direct materials $200,000 + direct labor $150,000 + factory overhead $310,000). Therefore, the correct answer is C.

Using the Absorption Method,cost of Goods Manufactured for the Year