Inventory Valuation under Absorption and Variable Costing The following informat

Question

Inventory Valuation under Absorption and Variable Costing The following information pertains to Synergy Inc. for last year: Beginning inventory in units Units produced Units sold Costs per unit: 7,500 20,000 23,700 Direct materials Direct labour Variable overhead Fixed overhead Variable selling expenses $11.00 $4.00 $1.50 $4.15 $3.00 $24,300 Fixed selling and administrative expenses Fixed overhead totals $83,000 per year. Required 1. Calculate the cost of one unit of product under absorption costing. Round your answer to the nearest cent. Use rounded amount in subsequent requirements per unit 2. Calculate the cost of one unit of product under variable costing. Round your answer to the nearest cent. Use rounded amount in subsequent requirements. per unit 3. How many units are in ending inventory? units . Calculate the cost of ending inventory under absorption costing 5. Calculate the cost of ending inventory under variable costing

Explanation / Answer

1) Unit product cost under absorption costing = 11+4+1.5+4.15 = 20.65 per unit

2) Unit product cost under variable costing = 11+4+1.5 = 16.50 per unit

3) Ending inventory unit = 7500+20000-23700 = 3800 units

4) Ending inventory under absorption costing = 3800*20.65 = 78470

5) ENding inventory under variable costing = 3800*16.50 = 62700

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