Answered

Delvin Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price………$120

Units in beginning inventory…….0

Units produced…..1800

Units sold…..1500

Units in ending inventory……….300

Variable costs per unit:

Direct materials………..$40

Direct labor………..$42

Variable manufacturing overhead………$2

Variable selling and admin………$9

Fixed costs:

Fixed manufacturing overhead………$7,200

Fixed selling and admin…………$28,500

What is the total period cost for the month under the absorption costing?

a.$42,000

b.$7,200

c.$49,200

d.$28,500

Answer :

Answer:

a.$42,000

Explanation:

The computation of the  total period cost for the month under the absorption costing is shown below

= Variable selling and admin cost + Fixed selling and admin cost

where,

Variable selling and admin cost is

= $9 × 1,500 units sold

= $13,500

And, the fixed selling and admin cost is $28,500

So, the total period cost is

= $13,500 + $28,500

= $42,000

As we know that the period cost includes the major part of selling and admin expenses and we considered the same

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