v2. eNow2 Onine teaching and learning resource from Cenpage Learning elook Calcu

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v2. eNow2 Onine teaching and learning resource from Cenpage Learning elook Calculator Inventory Valuation under Absorption Costing and Variable Costing At the end of the first year of operations, 5,900 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows: Direct materials Direct labor Fixed factory overhead Variable factory overhead Determine the cost of the finished goods inventory reported on the balance sheet under (a) the absorption costing concept and (b) the variable costing concept. Absorption costing $36.50 15.70 6.20 5.50 Variable costing Previous Ned 5 more Check My Work uses remaining

Explanation / Answer

A)

Notice that the fixed manufacturing overhead cost has not been included while computing the cost of one unit under variable costing system.

Selling and administrative expenses (both variable and fixed) are not relevant for the computation of unit product cost.

Computation of Unit Product Cost Absorption Costing Direct Meterial $                            36.50 Direct Labour $                            15.70 Variable Manufactoring Overhead $                              5.50 Fixed Manufactoring Overhead   $                              6.20 Unit Product Cost $                            63.90

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