Boysenberry Corp. has the following information for the months of January, Febru

Question

Boysenberry Corp. has the following information for the months of January, February, and March of the current year: January February March Units produced 10,000 10,000 10,000 Units sold 9,500 9,400 9,800 Production costs per unit (based on 10,000 units) are as follows: Direct materials $20.00 Direct labor 15.00 Variable factory overhead 8.00 Fixed factory overhead 4.00 Variable selling and admin. expenses 10.50 Fixed selling and admin. expenses 5.75 There was no beginning inventory in the month of January, and all units were sold for $75. Costs were stable over the three months. Calculate Boysenberry's ending inventory cost for February using the absorption costing method.

Explanation / Answer

Direct material $ 20 Direct labour $ 15 Variable factory overhead $    8 Fixed factory overhead $    4 Product cost per unit $ 47 Ending inventory, February (10,000+10,000-9,500-9,400)        1,100 Ending inventory value under absorption costing (1,100*$47) $ 51,700

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