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Youngstown Manufacturing: 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 Summary

The solution explains how to calculate the value of ending inventory under variable costing and absorption costing.

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

Under absorption costing, all manufacturing costs are taken as product cost
Total cost of production is
Direct labor $4,200
Direct materials ...

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