Archetype Fabrication Makes Pre-Stressed Concrete Forms for the Building Industry

question 63

Multiple Choice

Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology. At the beginning of January, selected account balances are shown in the T-accounts below. During January, the following 5 transactions take place:
1) Purchase $40,000 of materials on account.
2) Pay out $25,000 of direct labor costs.
3) Incur $9,000 of manufacturing overhead costs.
4) Complete 12 units. Each unit includes $1,500 of materials, $300 of direct labor, and $150 of manufacturing overhead costs.
5) Sell 10 of the 12 completed units at a price of $2,200.
-
Use the T-accounts shown above to record the transactions, and then answer the following question:
How much was the cost of goods sold?

• A) $23,400
• B) $19,500
• C) $22,000
• D) $25,600

---

Definitions:

Break-even Point

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and the business is not making a profit.

Materials Cost

The expense associated with the raw materials and supplies used in the production of goods or services.

Labor

The work performed by individuals that contributes to the production of goods or services in an economy, often categorized as manual or skilled tasks.

Monthly Expenses

Regular costs incurred every month, such as rent, utilities, and groceries, necessary for maintaining a standard of living.