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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Inventory Valuation under Absorption Costing

Refer to the data for Pelham Company on the previous page.

Required:

  1. 1. How many units are in ending inventory?
  2. 2. Using absorption costing, calculate the per-unit product cost.
  3. 3. What is the value of ending inventory under absorption costing?

Use the following information for Brief Exercises 3-30 and 3-31:

During the most recent year, Pelham Company had the following data associated with the product it makes:

Chapter 3, Problem 30BEB, Inventory Valuation under Absorption Costing Refer to the data for Pelham Company on the previous

1.

To determine

Calculate the ending inventory units.

Explanation

Cost:

Cost can be defined as the cash and cash equivalent which is incurred against the products or its related services which will benefit the organization in the future. There are two types of costs that are fixed and variable costs.

Use the following formula to calculate the value of ending inventory units:

Ending Inventory=Beggining Inventory+Units ProducedUnits Sold

2.

To determine

Compute the per-unit product cost with the help of absorption costing.

3.

To determine

Compute the value of ending inventory with the help of absorption costing.

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