Evaluation of month end inventory using absorption costing

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Reference no: EM13824242

Problem-

DeAnne Company produces a single product. The company's variable costing income statement for August appears below:

DeAnne Company

Income Statement
For the month ended August 31

 

Sales ($20 per unit)

$ 802,000

 

 

 


Variable expenses:

 

 

Variable cost of goods sold

521,300

 

Variable selling expense

80,200

 

 

 


Total variable expenses

601,500

 

 

 


Contribution margin

200,500

 

 

 


Fixed expenses:

 

 

Fixed manufacturing

142,880

 

Fixed selling and administrative

35,720

 

 

 


Total fixed expenses

178,600

 

 

 


Net operating income

$ 21,900

 

 

 


The company produced 35,720 units in August and the beginning inventory consisted of 8,340 units. Variable production costs per unit and total fixed costs have remained constant over the past several months. Under absorption costing, the ending inventory for the month ended August 31 would be reported at:

a. $51,480

b. $75,240

c. $67,320

d. $80,240

Additional Requirement-

The problem belongs to Basic Accounting and it illustrate about evaluation of month end inventory using absorption costing.

Reference no: EM13824242

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