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2010-02-15_014512_youngstown

2010-02-15_014512_youngstown - the ending finished-goods...

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13-B3 Comparison of Variable Costing and Absorption Costing 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
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Unformatted text preview: the ending finished-goods inventory cost under variable costing (1) (2) Absorption Variable Costing Costing Production costs: Direct materials used $3,500 $3,500 Direct labor 4,200 4,200 Variable manufacturing overhead 300 300 Fixed manufacturing overhead 2,200-Total $10,200 $8,000 Ending Inventory $1,275 $1,000 Ending Inventory (in units) = Unites Produced – Units Sold = 1,600 – 1,400 = 200 units Ending Inventory = [Total Cost × Ending Inventory (in units)] ÷ Units Produced Absorption: = ($10,200 ×200) ÷ 1,600 = $1,275 Variable: = ($8,000 × 200) ÷ 1,600 = $1,000...
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