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Inventory Valuation under Variable Costing Refer to the data for Pelham Company on the previous page. Required: 1. How many units are in ending inventory? 2. Using variable costing, calculate the per-unit product cost. 3. What is the value of ending inventory under variable 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:

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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
Publisher: Cengage Learning
ISBN: 9781337115773
BuyFind

Managerial Accounting: The Corners...

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

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Chapter
Section
Chapter 3, Problem 31BEB
Textbook Problem
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Inventory Valuation under Variable 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 variable costing, calculate the per-unit product cost.
  3. 3. What is the value of ending inventory under variable 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 31BEB, Inventory Valuation under Variable Costing Refer to the data for Pelham Company on the previous

Expert Solution

1.

To determine

Calculate the ending inventory units.

Explanation of Solution

Variable Cost:

Variable cost is the cost which varies due to the changes in the level of output to produce products and services in a relevant range.

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

Ending Inventory=Beggining Inventory+Units ProducedUnits Sold

Substitute 400 units for beginning inventory, 14,000 for units produced and 13,700 for units sold in the above formula

Expert Solution

2.

To determine

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

Expert Solution

3.

To determine

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

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Chapter 3 Solutions

Managerial Accounting: The Cornerstone of Business Decision-Making
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