Bryon Catering Produces Box Lunches,which It Sells for $20 Each

question 263

Multiple Choice

Bryon Catering produces box lunches,which it sells for $20 each.During the current month,Seattle produced 2,800 meals,but only sold 2,700 meals.The variable cost per meal was $12 and the sales commissions per meal were $1.Total fixed manufacturing costs were $1,400 and total fixed marketing and administrative costs were $1,200.What is the product cost per meal under absorption costing?

• A)$14.00
• B)$12.50
• C)$20.50
• D)$12.00

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Definitions:

Equivalent Units

A concept in cost accounting that converts partially completed units into a comparable number of fully completed units.

Conversion Costs

The sum of labor and overhead costs that are necessary to turn raw materials into finished products.

FIFO Method

First In, First Out; an inventory valuation method where the costs of the earliest goods purchased or produced are the first to be expensed.

Process Costing

A method of costing used for homogenous products, where it calculates the cost of each process or stage of production.