Inventory Valuation under Absorption Costing and Variable Costing

At the end of the first year of operations, $18,000$ units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows:

Direct materials

Direct labor

Flxed factory overhead

Variable factory overhead

$$25$

$20$

$30$

$5$

Determine the cost of the finished goods inventory reported on the balance sheet under $($a$)$ the absorption costing concept and $($b$)$ the variable costing concept. Absorption costing $540,000$

Variable costing $

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Recall that the fixed factory overhead cost is included in absorption costing, while only direct materials and labor and variable factory overhead are included in variable costing.