Missan,Inc There Are No Beginning Inventories

question 137

Multiple Choice

Missan,Inc.reports the following information: $$\begin{array} { | l | r | } \hline \text { Units produced } & 560 \text { units } \\\hline \text { Units sold } & 480 \text { units } \\\hline \text { Sales price } & \$ 170 \text { per unit } \\\hline \text { Direct materials } & \$ 27 \text { per unit } \\\hline \text { Direct labor } & \$ 11 \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 13 \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 17,900 \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 5 \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 14,300 \text { per year } \\\hline\end{array}$$ There are no beginning inventories.What is the ending balance in Finished Goods Inventory using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

• A) $5,597
• B) $2,557
• C) $4,080
• D) $6,637

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Definitions:

Gross Profit Method

An accounting technique used to estimate inventory levels and cost of goods sold, calculated as sales minus the cost of goods sold.

Estimated Gross Profit Rate

A projected figure that calculates the percentage of gross profit to sales, used for analyzing a company's financial health.

Inventory Turnover

A metric that indicates how many times a company’s inventory is sold and replaced over a specific period.