Mediocre Manufacturing Company produces a single product. Management budgeted the following costs for its first year of operations. These costs are based on a budgeted volume of 4,000 units produced and sold:
Direct Materials...........$28,000
Direct Labor...............$14,000
Manufacturing overhead:
Variable..............$56,000
Fixed.................$63,000
Selling and administrative:
Variable..............$7,000
Fixed.................$42,000
During the first year of operations, Mediocre actually produced 4,000 units but only sold 3,500 units. Actual costs did not fluctuate from the cost behavior patterns described above. The 3,500 units were sold for $72 per unit. Assume that direct labor is a variable cost.
What is the total cost that would be assigned to Mediocre's finished goods inventory at the end of the first year of operations under the absorption costing method?
A. 12,250
B. 20,125
C. 23,000
D. 26,250