Question 8

ABC Ltd makes widgets. It has no opening inventory and the closing inventory is 500 units. The budgeted and actual fixed manufacturing costs are $1,000 and the budgeted and actual production is 2,000 units.

The variable manufacturing cost was $2 per unit and the selling price was $8 per unit. Sales commissions of 4.5% of sales revenue are paid to sales people.

Other non-manufacturing fixed costs total $500.

What is the profit under absorption costing?

Select one:

$6,960

$7,710

$7,460

$7,210