question archive Cutterski Corporation manufactures a propeller
Cutterski Corporation manufactures a propeller
Subject:AccountingPrice:2.87 Bought7
Cutterski Corporation manufactures a propeller. Shown below is Cutterski's cost structure:
| Variable cost per propeller | Total fixed cost for the year | |
| Manufacturing cost | $115 | $748,800 |
| Selling and administrative expense | $21 | $174,800 |
In its first year of operations, Cutterski produced 93,600 propellers but only sold 87,400.
What would Cutterski report as its cost of goods sold under absorption costing?
$10,051,000
$10,750,200
$12,760,400
$11,684,600
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Answer: $10,750,200
Explanation:
Fixed manufacturing cost per unit = Fixed Manufacturing cost / units produced
Fixed manufacturing cost per unit = $748,800 / 93,600 = $8
Total unit manufacturing cost = $115 + $8 = $123
Cost of goods sold = Unit manufacturing cost * units sold
Cost of goods sold = $123 * 87,400
Cost of goods sold = $10,750,200
