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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
    variable factory overhead 44000
    fixed factory overhead 36800

    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

    © BrainMass Inc. brainmass.com December 24, 2021, 8:46 pm ad1c9bdddf
    https://brainmass.com/business/inventory/inventory-cost-variable-absorption-costing-312117

    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

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com December 24, 2021, 8:46 pm ad1c9bdddf>
    https://brainmass.com/business/inventory/inventory-cost-variable-absorption-costing-312117

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