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Webster, Inc. began operations at the start of the present year, having a production target of 60,000 units. Real production totalled 60,000 units, and the company sold 95% of its manufacturing output at $50 per unit. The following costs were earned:
Manufacturing:
Direct materials used $240,000
Direct labor 480,000
Variable manufacturing overhead 360,000
Fixed manufacturing overhead 600,000
Selling and administrative:
Variable 180,000
Fixed 630,000
Required:
A. Suppose the use of variable costing, compute the cost of Webster's finish finished-goods inventory.
B. Calculate the company's contribution margin. Would Webster disclose the contribution margin on a variable-costing income statement or an absorption-costing income statement?
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