Last Year, Ella Company Produced 10,000 Units and Sold 9,000

question 6

Multiple Choice

Last year, Ella Company produced 10,000 units and sold 9,000 units at a price of $9 per unit. Costs for last year were as follows:
Fixed factory overhead is applied on the basis of expected production. Last year, Ella expected to produce 10,000 units.
$$\begin{array} { l r } \text { Direct materials } & \$ 10,000 \\\text { Direct labour } & 15,000 \\\text { Variable factory overhead } & 5,000 \\\text { Fixed factory overhead } & 20,000 \\\text { Variable selling expense } & 7,200 \\\text { Fixed selling expense } & 5,000 \\\text { Fixed administrative expense } & 12,000\end{array}$$
-Refer to the Figure.Assume that beginning inventory was zero.What is the value of ending inventory under absorption costing?

• A)$2,000
• B)$3,000
• C)$3,720
• D)$5,000

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