Unit Costs, Inventory Valuation, Variable and Absorption Costing

Snyder Company produced 85,600 units during its first year of operations and sold 82,000 at $21.15 per unit. The company chose practical activityat 85,600 unitsto compute its predetermined overhead rate. Manufacturing costs are as follows:

Direct materials	$492,200
Direct labor	118,128
Expected and actual variable overhead	388,624
Expected and actual fixed overhead	421,152

Required:

If required, round unit cost answers to the nearest cent.

1. Calculate the unit cost and the cost of finished goods inventory under absorption costing.

Unit Cost	$fill in the blank 1
Cost of finished goods inventory	$fill in the blank 2

2. Calculate the unit cost and the cost of finished goods inventory under variable costing.

Unit Cost	$fill in the blank 3
Cost of finished goods inventory	$fill in the blank 4

3. What is the dollar amount that would be used to report the cost of finished goods inventory to external parties? $fill in the blank 5

Why?

Because absorption costing is required for external reportingBecause absorption costing is a more accurate methodBecause absorption costing always results in higher net income