Question 1

Inventory Valuation under Absorption and Variable Costing with Decrease in Ending Inventory

The following information pertains to Chacon Inc. for last year:

Beginning inventory in units	7,000
Units produced	20,000
Units sold	23,700
Costs per unit:
Direct materials	$8.00
Direct labor	$4.00
Variable overhead	$2.25
Fixed overhead*	$4.15
Variable selling expenses	$3.00
Fixed selling and administrative expenses	$24,300
* Fixed overhead totals $83,000 per year.

Required:

1. Calculate the cost of one unit of product under absorption costing. Round your answer to the nearest cent. $per unit

2. Calculate the cost of one unit of product under variable costing. Round your answer to the nearest cent. $per unit

3. How many units are in ending inventory? units

4. Calculate the cost of ending inventory under absorption costing. $

5. Calculate the cost of ending inventory under variable costing. $

Question 2

Inventory Valuation under Variable Costing

Lane Company produced 50,000 units during its first year of operations and sold 47,300 at $12 per unit. The company chose practical activityat 50,000 unitsto compute its predetermined overhead rate. Manufacturing costs are as follows:

Direct materials	$146,370
Direct labor	110,670
Variable overhead	77,350
Fixed overhead	60,690

Required:

1. Calculate the cost of one unit of product under variable costing. Round your interim calculations and final answer to the nearest cent. $ per unit

2. Calculate the cost of ending inventory under variable costing. $