Question

Exercise 19-1 Computing unit and inventory costs under absorption costing LO P1 1.25 points Trio Company reports the following information for the current year, which is its first year of operations. 15 per unit 18 per unit eBook Hint Direct materials Direct labor Overhead costs for the year Variable overhead Fixed overhead Units produced this year Units sold this year Ending finished goods inventory in units $ 75,000 per year $ 150,000 per year 25,000 units 19,000 units 6,000 units Print References

Answer 1

Compute the cost per unit using absorption costing.
Cost per unit of finished goods using:	Absorption costing
Direct materials per unit	$15.00
Direct labor per unit	$18.00
Variable overhead per unit           [Refer working note 1]	$3.00
Fixed overhead per unit                [Refer working note 2]	$6.00
Cost per unit of finished goods	$42.00
Determine the cost of ending finished goods inventory using absorption costing.
Cost per unit of finished goods using:	Absorption costing
Number of units in finished goods	6,000
Total cost of finished goods inventory   [6,000 units x $42 per unit]	$252,000
Determine the cost of goods sold using absorption costing.
Cost per unit of goods sold using	Absorption costing
Number of units in sold goods	19,000
Total cost of sold goods                          [19,000 units x $42 per unit]	$798,000

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Working note 1 - Computation of variable overhead cost per unit
Variable overhead cost for the year             (a)	$75,000
Units produced this year                               (b)	$25,000
Variable overhead per unit                           (a / b)	$3.00

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Working note 2 - Computation of fixed overhead cost per unit
Fixed overhead cost for the year                  (a)	$150,000
Units produced this year                               (b)	$25,000
Fixed overhead per unit                               (a / b)	$6.00