Xenna Company manufactures coffee tables. The following data is related to sales and production of the tables for last year.

-Using absorption costing, what is cost of goods sold at Xenna Company for last month?
A) $1,485,000
B) $1,215,000
C) $1,188,000
D) $1,152,000

Question

Xenna Company manufactures coffee tables. The following data is related to sales and production of the tables for last year.
 
-Using absorption costing, what is cost of goods sold at Xenna Company for last month?
A) $1,485,000 
B) $1,215,000 
C) $1,188,000 
D) $1,152,000

Quizplus · Accepted Answer

To calculate cost of goods sold using absorption costing, we need to consider both variable and fixed manufacturing overhead costs. 
Total manufacturing cost = Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead 
= $630,000 + $540,000 + $432,000 + $342,000 
= $1,944,000 
Cost of goods sold = Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory 
= $144,000 + $1,944,000 - $300,000 
= $1,788,000 
Therefore, the correct answer is C, $1,188,000.

Xenna Company Manufactures Coffee Tables