The accounting records for Eisner Manufacturing Company included the following c

Question

The accounting records for Eisner Manufacturing Company included the following cost information relating to its first year of operations: Direct materials Direct labor Fixed manufacturing overhead Variable manufacturing overhead $ 60,000 $ 80,000 100,000 $ 20,000 Assume the company produced 10,000 units of inventory and sold 6,000 of these units for $192,000. What amount of finished goods will be reported on the balance sheet at the end of the year under absorption costing? Under variable costing? A. $104,000, $64,000 B. $64,000, $104,000 C. $130,667, $64,000 D. $64,000, $130,667

Explanation / Answer

Calculate unit product cost and finished goods :

So answer is a) $104000 ; $64000

Absorption variable Direct material 6 6 Direct labour 8 8 Variable manufacturing overhead 2 2 Fixed manufacturing overhead 10 0 Unit product cost 26 16 Finished goods inventory 4000 4000 Finished goods inventory cost 104000 64000

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