eBook

Inventory Valuation under Absorption and Variable Costing

San Remo Company produced $80,000$ units last year. The company sold $79,000$ units and there was no beginning inventory. The company chose practical activity$-$at $80,000$ units$-$to compute its predetermined overhead rate. Manufacturing costs are as follows:

Direct materials

Direct labour

Variable overhead

Fixed overhead

$$721,160$

$125,840$

$106,480$

$276,848$

Required:

Calculate the cost of one unit of product under absorption costing. Round your interim calculations and final answer to the nearest cent. Use rounded answer in subsequent requirements.

$

Calculate the cost of one unit of product under variable costing. Round your interim calculations and final answer to the nearest cent. Use rounded answer in subsequent requirements.

Calculate the cost of ending inventory under absorption costing.

Calculate the cost of ending inventory under variable costing.