Calculate cost of ending inventory under variable costing

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Question - Inventory Valuation under Absorption and Variable Costing

Overton Company produced 80,000 units last year. The company sold 79,000 units and there was no beginning inventory. The company chose practical activity-at 80,000 units-to compute its predetermined overhead rate. Manufacturing costs are as follows:

Direct materials

$596,000

Direct labor

104,000

Variable overhead

88,000

Fixed overhead

228,800

Required:

1. Calculate the cost of one unit of product under absorption costing.

2. Calculate the cost of one unit of product under variable costing.

3. Calculate the cost of ending inventory under absorption costing.

4. Calculate the cost of ending inventory under variable costing.

Reference no: EM132116759

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