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    Absorption costing / variable costing

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    Consider the following information pertaining to a year's operations of Youngstown Manufacturing:
    Units sold 1,400
    Units produced 1,600
    Direct labor $4,200
    Direct materials used 3,500
    Fixed manufacturing overhead 2,200
    Variable manufacturing overhead 300
    Selling and administrative expenses (all fixed) 700
    Beginning inventories 0
    Contribution margin 5,600
    Direct-material inventory, end 800
    There are no work-in-process inventories.
    1. What is the ending finished-goods inventory cost under absorption costing?
    2. What is the ending finished-goods inventory cost under variable costing?

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    Solution Preview

    1. What is the ending finished-goods inventory cost under absorption costing?

    Total cost of production is
    Direct labor $4,200
    Direct materials used 3,500
    Fixed manufacturing overhead 2,200
    Variable manufacturing overhead ...

    Solution Summary

    The solution explains how to determine the amount of ending inventory under absorption costing and variable costing

    $2.19