A company has the following information for its first month of operations: $\begin{array}{lr}
\text { Raw material s used } & \$ 25,000 \
\text { Sales } \$ 65 \text { per unit) } & \$ 78,000 \
\text { Direct } 1 \text { abor } & \$ 42,000 \
\text { Variable factory overhead } & \$ 17,000 \
\text { Fixed factory overhead } & \text { unknown }\
\text { Variable selling and administrative } & \$ 3,000 \
\text { Fixed selling and administrative } & \$ 5,000 \
\text { Gross profit } & \$ 20,000 \
\text { Contribution margin } & \text { unknown }
\end{array}$ The company sold half of the units it produced._____ is the cost of goods sold under absorption costing.
A)$30,000
B)$78,000
C)$58,000
D)$42,000

Question

Quizplus · Accepted Answer

The cost of goods sold (COGS) under absorption costing includes all manufacturing costs: direct materials, direct labor, and both variable and fixed manufacturing overhead. Given the information, COGS = \$25,000 (raw materials) + \$42,000 (direct labor) + \$17,000 (variable factory overhead) + Fixed factory overhead (unknown). However, since we're not given the fixed factory overhead and the exact COGS, we can't directly calculate it. The correct answer is inferred based on the information provided and the understanding of absorption costing principles, but without the fixed factory overhead, the exact number can't be determined from the provided options. The explanation mistakenly suggests a specific answer without enough information to accurately calculate COGS under absorption costing.

A Company Has the Following Information for Its First Month