Question

Play Now has a budgeted (expected) output of 100,000 sliding boards and an actual output of 90,000 sliding boards. The following data from last year is available:

Selling price = $100 per unit

Standard direct labor hours per unit = 1 hour per unit

Actual direct labor cost per unit = 1.1 hours per unit x $11 per hour

Budgeted total direct labor cost = $1,000,000

Budgeted fixed manufacturing overhead = $1,900,000

Actual fixed manufacturing overhead = $2,178,000

Budgeted variable manufacturing overhead = $1,000,000

Actual variable manufacturing overhead = $940,500

Budgeted machine hours = 100,000 hours

Actual machine hours = 99,000 hours

Actual sales = 85,000 units

Actual variable selling costs = $50 per unit sold

Actual fixed selling costs = $900,000

The company has no direct material (materials are supplied by customers), no beginning or ending work in process, and no beginning finished goods inventories.

Variable and fixed manufacturing overhead are allocated based on direct labor hours.

Calculate ending finished goods inventory using normal costing, given the following information on pre-determined overhead rates:

Pre-determined overhead for direct labor = $5/direct labor hour

Pre-determined overhead for variable overhead = $7/direct labor hour

Pre-determined overhead for fixed overhead = $2/direct labor hour