Kern Corporation produces a single product. Selected information concerning the operations of the company follow: Assume that direct labor is a variable cost.
Under absorption costing, the value of the ending finished goods inventory would be:
A) $7,200
B) $7,650
C) $8,000
D) $9,700

Question

Kern Corporation produces a single product. Selected information concerning the operations of the company follow:   Assume that direct labor is a variable cost.
Under absorption costing, the value of the ending finished goods inventory would be:
A) $7,200 
B) $7,650 
C) $8,000 
D) $9,700

Quizplus · Accepted Answer

Units in ending inventory = Units in beginning inventory + Units produced - Units sold
= 0 units + 10,000 units - 9,000 units = 1,000 units
 11eacbfc_c6dc_fded_8ffe_4dbfb1ac150d_TB7552_00 Absorption costing unit product cost = $97,000 ÷ 10,000 units = $9.70 per unit
Ending finished goods inventory = $9.70 per unit × 1,000 units = $9,700

Kern Corporation Produces a Single Product