# Aspen View produces a full line of sunglasses. This year

Aspen View produces a full line of sunglasses. This year it began producing a new model of sun-glasses, the Peak 32. It produced 5,300 pairs and sold 4,900 pairs. The following table summarizes the fixed and variable costs of producing Peak 32 sunglasses. Aspen View uses variable costing to value its ending inventory.

Required:
a. What is Aspen Viewâ€™s ending inventory value of Peak 32 sunglasses?
b. Aspen View is considering switching from variable costing to absorption costing. Would this yearâ€™s net income from Peak 32 sunglasses be higher or lower using absorption costing? Explain why.
c. Suppose Aspen View uses absorption costing. If, instead of producing 5,300 pairs of Peak 32s it produced only 5,000, would net income from Peak 32 sunglasses be higher or lower from the smaller production compared to the larger production? Explain why.
d. Aspen View has an opportunity cost of capital of 20 percent. What is the cost of producing 5,300 pairs of Peak 32s instead of 4,900pairs?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...