The Southern Corporation Manufactures a Single Product and Has the Following

question 286

Multiple Choice

The Southern Corporation manufactures a single product and has the following cost structure: Last year, 7,000 units were produced and 6,800 units were sold. There was no beginning inventory.
Under absorption costing, the cost of goods sold for the year would be:

• A) $258,400
• B) $394,400
• C) $353,600
• D) $398,400

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Definitions:

Direct Labor Variances

The difference between the actual costs of direct labor and the standard or expected costs, used for budgeting and financial analysis.

Direct Labor Costs

The expenses related to the wages of employees who are directly involved in the production or manufacturing of goods. This is a specific type of direct cost.

Property, Plant, and Equipment

Long-term tangible assets used in a company's operations and not expected to be converted to cash in the short term.

Standard Cost

A preset cost for delivering a product or service under normal conditions, used as a benchmark for measuring performance.