Accounting 9706 · AS & A Level · Traditional costing methods

Traditional costing methods — practice question

A business makes and sells watches. During 2015, 4000 watches were produced and 3600 watches were sold. Further details for the year were as follows: direct materials $\$60$ per unit; direct labour $\$80$ per unit; variable selling expenses $\$15$ per unit; fixed manufacturing overheads $\$45$ per unit; fixed administrative costs $\$50$ per unit. What is the cost of goods sold for 2015 if the business uses absorption costing?

  • A$\$558\,000$
  • B$\$666\,000$
  • C$\$720\,000$
  • D$\$740\,000$

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