Question

Welcome, Viekboard Learn Google Docs MKTO 467w, C...er Behavior nant Messages Proposal Low-involvement Versus High-In... Cengage CengageNOWY2 Online teachi eBook Calculator Inventory Valuation under Absorption Costing and Variable Costing At the end of the first year of operations, 21,500 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows: Direct materials Direct labor Fixed factory overhead Variable factory overhead Determine the cost of the finished goods inventory reported on the balance sheet under (a) the absorption costing concept and (b) the variable costing concept. ERA1 Absorption costing Variable costing ERA2 Next > Check My Work Email Instructor Save and Exit Submit Assignment for Grading

Answer 1

Ans. : Absorption costing concept :

Under absorption costing concept, fixed cost are also to be considered.

Cost of finished goods inventory = ( Direct material +direct labour + fixed factory overhead + variable factory overhead) per unit * units in closing inventory

= ( 30+18+22+14)* 21,500 = dollar 18,06,000

Variable costing concept :

Under this concept, fixed factory overhead is not considered for valuation.

Cost of finished goods inventory = ( 30+18+14)*21,500

= dollar 13,33,000