The controller of BK Company has requested a quick estimate of the manufacturing supplies that it needs for the month of July when the expected production are 470,000 units. Below are the actual data from the prior three months of operations. March April May Production in units 450,000 540,000 480,000 Manufacturing supplies P 723,060 853,560 766,560 Using these data and high-low method, (Assume that this activity is within the relevant range) compute for the following: a. What is the variable cost per unit? b. How much is the fixed costs? c. What is the reasonable estimate of the cost of manufacturing supplies that would be needed for July?

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.