Fargo Engines Incorporated Sells Part Number 45G to Toy Manufacturers

question 68

Multiple Choice

Fargo Engines Incorporated sells part number 45G to toy manufacturers around the world.Information about part number 45G is contained in the table below.Fargo uses a weighted-average periodic inventory system. Determine the cost of goods sold and ending inventory cost of part 45G if 2,000 units remain unsold in inventory at the end of the accounting period.

• A)Cost of goods sold is $66,133 and ending inventory is $17,467.
• B)Cost of goods sold is $66,267 and ending inventory is $25,733.
• C)Cost of goods sold is $65,803 and ending inventory is $26,197.
• D)Cost of goods sold is $66,880 and ending inventory is $16,720.

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Definitions:

Absorption Costing

Absorption costing is an accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Absorption Costing

An accounting method that includes all manufacturing costs (both variable and fixed) in the cost of a product.

Unit Product Cost

The calculated cost associated with producing a single unit of product, including direct materials, labor, and overhead.

Absorption Costing

An accounting practice where the cost of a product is calculated by including all expenses from manufacturing, like direct materials, direct labor, and both variable and fixed overheads.