Excerpt from Wallis Corporation Per Unit Per Month Selling price $ 100 Direct materials 30 Direct labor 20 Variable manufacturing overhead 10 Variable selling and administrative expenses 7 Fixed manufacturing overhead $ 10,000 Fixed selling and administrative expenses 3,000 What is the cost of goods sold for the month of January using the absorption costing method? A.$24,000 B. $30,000 C. $32,000 D.$40,000

C. $32,000

Explanation:

The computation of the Cost of goods sold under absorption costing is shown below:

= Units sold * cost per unit

where,

Units sold is 400 units

And the cost per unit is

= Direct material per unit + Direct labor per unit + variable overhead per unit + (Fixed costs : produced units)

= $30 + $20 + $10 + ($10,000 : 500 units)

= $60 + $20

= $80

Now placing these values to the above formula

So, the value is

= 400 units * $80

= $32,000