Online tear Which of the gnmentitak Main do?invol Calouiator Inventory Valuation

Question

Online tear Which of the gnmentitak Main do?invol Calouiator Inventory Valuation under Absorption Costing and Váriable Costing At the end of the first year of operations, 6,500 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows: Direct materials Direct labor Fxed factory overhead Variable factory overhead $37.90 16.10 7.40 Determine the cost of the firished goods inventory reported on the balance sheet under (o) the absorption costing concept and (b) the variable cesting concept Absorption costing Variable costing Previous Submit Test fo

Explanation / Answer

Answer a.

Absorption Costing:

Unit Product Cost = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead
Unit Product Cost = $37.90 + $16.10 + $6.50 + $7.40
Unit Product Cost = $67.90

Number of units in ending inventory = 6,500

Cost of Finished goods inventory = Unit Product Cost * Number of units in ending inventory
Cost of Finished goods inventory = $67.90 * 6,500
Cost of Finished goods inventory = $441,350

Answer b.

Variable Costing:

Unit Product Cost = Direct Materials + Direct Labor + Variable Manufacturing Overhead
Unit Product Cost = $37.90 + $16.10 + $6.50
Unit Product Cost = $60.50

Number of units in ending inventory = 6,500

Cost of Finished goods inventory = Unit Product Cost * Number of units in ending inventory
Cost of Finished goods inventory = $60.50 * 6,500
Cost of Finished goods inventory = $393,250

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.