Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows:
Sales totaled $825,000 for the year, variable selling and administrative expenses totaled $108,000, and fixed selling and administrative expenses totaled $165,000. There was no beginning inventory. Assume that direct labor is a variable cost.
-Under absorption costing,the ending inventory for the year would be valued at:
A) $0
B) $216,000
C) $248,250
D) $180,000

Question

Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000 units and sold 15,000 units. Production costs for the year were as follows:
  Sales totaled $825,000 for the year, variable selling and administrative expenses totaled $108,000, and fixed selling and administrative expenses totaled $165,000. There was no beginning inventory. Assume that direct labor is a variable cost.
-Under absorption costing,the ending inventory for the year would be valued at:
A) $0 
B) $216,000 
C) $248,250 
D) $180,000

Quizplus · Accepted Answer

Units in ending inventory = Units in beginning inventory + Units produced - Units sold
= 0 +20,000 units - 15,000 units = 5,000 units
 11ea7761_182e_6cef_81a5_871e954cdef9_TB2580_00

Krepps Corporation Produces a Single Product