Inventory Valuation under Absorption and Variable Costing At the end of the first year of operations, 5,500 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows: Direct materials $39.90   Direct labor 16.30   Fixed factory overhead 6.80   Variable factory overhead 6.00   How do I 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? Absorption costing $ Variable costing $ Please give me step by step instructions on how I do this, and how do I determine the finished goods inventory? Liz C

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management analysis
Section: Chapter Questions
Problem 1E: At the end of the first year of operations, 21,500 units remained in the finished goods inventory....
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Inventory Valuation under Absorption and Variable Costing

At the end of the first year of operations, 5,500 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows:

Direct materials $39.90  
Direct labor 16.30  
Fixed factory overhead 6.80  
Variable factory overhead 6.00  

How do I 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?

Absorption costing $
Variable costing $

Please give me step by step instructions on how I do this, and how do I determine the finished goods inventory?

Liz C

 

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