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# Inventory Cost using Variable & Absorption Costing

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The following production data came from the records of LeShaq Athletic Enterprises for the year ended December 31, 2011

matierals 480000
labor 260000

During the year 40,000 units where manufactured but only 35,000 units where sold. Determine the effect on incentory valuation by computing the following

1. total inventoriable cost annd the cost of the 35,000 units sold and the 5000 units in
ending inventory, using varible costing

2. total invnentorable cost and the cost of the 35,000 untis sold ad the 5000 units
in the ending inventory using absorption costing

## SOLUTION This solution is FREE courtesy of BrainMass!

1. Variable Costing

a) Total Inventoriable Cost = 480000+260000+44000 = \$784,000
b) Cost of 35k units = 784000/40000 * 35000 = \$686,000
c) Ending Inventory = \$19.60 * 5000 = \$98,000

2. Absorption Costing

a) Total Inventoriable Cost = 480000+260000+44000+36800 = \$820,800
b) Cost of 35k units = 820800/40000 * 35000 = \$718,200
c) Ending Inventory = \$20.52 * 5000 = \$102,600

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