Homework answers / question archive / Suppose that a cement factory has a normal production capacity of 80

Suppose that a cement factory has a normal production capacity of 80

Accounting

Share With

Suppose that a cement factory has a normal production capacity of 80.000 tons. In March, 20.000 tons were produced and 15.000 tons were sold. Here are the data: (a) Direct material cost 200.000 $, (b) Direct labor cost 800.000 $, (c) Factory overhead 1.000.000 $. As an internal auditor, you have explored that 100% of the direct labor costs and 80% of the factory overhead is fixed. Now, what would be the cost of cement sold when normal absorption costing is used?

1. 450.000 $
2. 500.000 $
3. 550.000 $
4. 600.000 $