Angels R Us is currently operating at 100% capacity and incurred the following costs during the first month of operations: If the company has ending inventory of 1,600 units for the month, how much inventory would be reported on the balance sheet using absorption costing?
A)$64,000.
B)$56,000.
C)$66,400.
D)$78,400.

Question

Angels R Us is currently operating at 100% capacity and incurred the following costs during the first month of operations:  If the company has ending inventory of 1,600 units for the month, how much inventory would be reported on the balance sheet using absorption costing?
A)$64,000. 
B)$56,000. 
C)$66,400. 
D)$78,400.

Quizplus · Accepted Answer

($240,000 + $180,000 + $280,000 + $100,000) ÷ 20,000 = $40 per unit
$40 x 1,600 = $64,000
(DL + DM + V manufacturing costs + F manufacturing costs) ÷ unit produced = manufacturing cost per unit 
Manufacturing cost per unit x end inventory units

Angels R Us Is Currently Operating at 100% Capacity and Incurred