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Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 90 0 Units in beginning inventory Units produced Units sold Units in ending inventory 3,400 3,000 400 A A A NON Variable costs per unit: Direct materials $ 21 Direct labor $ 38 Variable manufacturing overhead $ Variable selling and administrative expense Fixed costs: $ 54,400 Fixed manufacturing overhead $ 3
Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 90 0 Units in beginning inventory Units produced Units sold Units in ending inventory 3,400 3,000 400 A A A NON Variable costs per unit: Direct materials $ 21 Direct labor $ 38 Variable manufacturing overhead $ Variable selling and administrative expense Fixed costs: $ 54,400 Fixed manufacturing overhead $ 3.000 Fixed selling and administrative expense the total peried cost for the month under the absorption cesting
Expert Solution
Under absorption costing, all costs are absorbed by the product, i.e, all costs are considered to calculate cost of the product, whether fixed or variable. Period costs are those costs that are not related to production activity. In simple words, all costs which are not product costs are period costs.
Here, selling and adminstrative expenses are period costs.
Variable = 3,000 * 4 = $ 12,000
Fixed = $ 3,000
Total period costs = $ 15,000
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