Question

Brown Company manufactures and sells pianos. The following information is available for its single model piano, of which 0 were in inventory at the beginning of the period, 1,000 were manufactured completely. Of those manufactured during the period, 500 have been sold, and 500 remain in finished goods inventory. Selling price (per unit) - $6,000 Variable costs (per unit) - Materials - $2,000 - Labor - $1,000 - Selling - $500 Fixed Costs (total) - Manufacturing - $90,000 - Selling - $25,000 Given the information above what is the cost of goods sold for the period? $1,820,000 $1,590,000 $1,500,000 $1,545,000

Variable costing

Answer 1

Answer is $1,590,000

Variable Cost per unit = Materials + Labor
Variable Cost per unit = $2,000 + $1,000
Variable Cost per unit = $3,000

Number of units sold = 500

Variable Cost of Goods Sold = Variable Cost per unit * Number of units sold
Variable Cost of Goods Sold = $3,000 * 500
Variable Cost of Goods Sold = $1,500,000

Cost of Goods Sold = Variable Cost of Goods Sold + Fixed Cost of Goods Sold
Cost of Goods Sold = $1,500,000 + $90,000
Cost of Goods Sold = $1,590,000