Trio Company reports the following information for the current year, which is its first year of operations. Direct materials $13 per unit
Direct labor $19 per unit
Overhead costs for the year
Variable overhead $45,000 per year
Fixed overhead $90,000 per year
Units produced this year 22,500 units
Units sold this year 16,500 units
Ending finished goods
inventory in units 6,000 units
Compute the product cost per unit using absorption costing. Cost per unit of finished goods using: Absorption costing Fixed overhead per unit Direct materials per unit Variable overhead per unit Direct labor per unit Cost per unit of finished goods 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 Total cost of finished goods inventory Determine the cost of goods sold using absorption costing. Absorption costing Cost per unit of goods sold using Number of units in sold goods Total cost of sold goods

1. $38.00

2. $228,000

3. $627,000

Explanation:

Absorption Costing also known as full costing includes both the fixed and variable manufacturing overheads in product valuation. All no-n manufacturing overheads are regarded as period costs and are not included in product valuation.

Product cost per unit calculation :

Direct materials                                              $13.00

Direct labor                                                     $19.00

Overhead costs

Variable overhead ($45,000/22,500)           $2.00

Fixed overhead ($90,000/22,500)                $4.00

Total Unit Cost                                               $38.00

Cost of ending finished goods inventory using absorption costing :

Total Cost = Total Unit Cost   × Number of Units in Finished Goods

        = $38.00 × 6,000 units

        = $228,000

Cost of goods sold using absorption costing :

Total Cost = Total Unit Cost   × Number of Units Sold

        = $38.00 × 16,500 units

        = $627,000

answer; i do believe that the correct answer is (d) referrals from

answer; customers within the organization