Jeppson Company manufactures computer hard drives. The following data is related to sales and production of the computer hard drives for last year.

-Using absorption costing, what is cost of goods available for sale at Jeppson Company for last month?
A) $97,500
B) $78,000
C) $120,000
D) $30,000

Question

Jeppson Company manufactures computer hard drives. The following data is related to sales and production of the computer hard drives for last year.
 
-Using absorption costing, what is cost of goods available for sale at Jeppson Company for last month?
A) $97,500 
B) $78,000 
C) $120,000 
D) $30,000

Quizplus · Accepted Answer

Absorption costing includes both variable and fixed manufacturing costs in the cost of goods sold. The cost of goods available for sale is the sum of the beginning finished goods inventory, the cost of goods manufactured, and the ending finished goods inventory. In this case, the cost of goods manufactured is $78,000, and the beginning and ending finished goods inventories are $22,500 and $20,000, respectively. Therefore, the cost of goods available for sale is $78,000 + $22,500 + $20,000 = $120,000.

Jeppson Company Manufactures Computer Hard Drives