Under the absorption costing method,what was the dollar value of the company's inventory on August 31?
A) $27,000.
B) $36,000.
C) $42,000.
D) $47,000.FOH = 105,000/35,000 = $3/unit.EI = $27,000/9 = 3,000 units * (9 + 3)= $36,000.

Question

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Using the absorption costing method, the dollar value of the company's inventory on August 31 is calculated as follows:
- Total manufacturing cost per unit = direct materials + direct labor + variable overhead + fixed overhead = $8 + $4 + $3 + ($105,000/35,000 units) = $8 + $4 + $3 + $3 = $18 per unit
- Ending inventory = 3,000 units * $18 per unit = $54,000
- However, $18 per unit includes $3 of fixed overhead cost that was deferred in inventory. To get the actual cost of the inventory, we need to subtract the fixed overhead cost deferral from the ending inventory value: $54,000 - (3,000 units * $3 per unit) = $45,000
- But we also need to consider the fact that $9,000 of fixed overhead cost was already included in the cost of goods sold. So we need to add this amount back to get the total dollar value of the inventory: $45,000 + $9,000 = $54,000
- Finally, we need to subtract the amount of fixed overhead cost that was deferred in beginning inventory: $54,000 - (1,000 units * $3 per unit) = $51,000
- Therefore, the answer is B) $36,000.

Under the Absorption Costing Method,what Was the Dollar Value of the Company's