During Its First Year of Operations, the McCormick Company Incurred

question 164

Multiple Choice

During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $5 per unit, Direct labor, $3 per unit, Variable overhead, $4 per unit, and Fixed overhead, $250,000. The company produced 25,000 units, and sold 20,000 units, leaving 5,000 units in inventory at year-end. What is the value of ending inventory under absorption costing?

• A) $60,000
• B) $110,000
• C) $50,000
• D) $250,000

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Definitions:

Personal Space

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