Camile Company Has No Beginning and Ending Inventories,and Reports the Following

question 92

Multiple Choice

Camile Company has no beginning and ending inventories,and reports the following data about its only product:
$$\begin{array} { l l } \text { Direct materials used } & \$ 100,000 \\\text { Direct labor } & \$ 80,000 \\\text { Fixed indirect manufacturing } & \$ 50,000 \\\text { Fixed selling and administrative } & \$ 220,000 \\\text { Variable indirect manufacturing } & \$ 20,000 \\\text { Variable selling and administrative } & \$ 75,000 \\\text { Selling price(per unit) } & \$ 84\end{array}$$
$\begin{array} { l } \text {Units produced and sold }&10,000 \\\end{array}$

Camile Company uses the absorption approach to prepare the income statement.What is the product cost per unit?

• A) $20
• B) $25
• C) $27.50
• D) $32.50

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overheads required to convert raw materials into finished goods.

Equivalent Units

A concept in cost accounting used to calculate the cost of partially completed goods by converting them into a number of fully completed units.

Conversion Cost

The sum of labor and overhead expenditures incurred to convert raw materials into finished goods.

FIFO Method

"First In, First Out," an inventory valuation method where goods that are first added to inventory are the first ones considered sold, used in accounting to calculate cost of goods sold and ending inventory.