Question

Krepps Corporation produces a single product. Last year, Krepps manufactured 28,000 units and sold 22,500 units. Production costs for the year were as follows:

Direct materials	$	229,600
Direct labor	$	134,400
Variable manufacturing overhead	$	215,600
Fixed manufacturing overhead	$	336,000

Sales totaled $1,046,250 for the year, variable selling and administrative expenses totaled $117,000, and fixed selling and administrative expenses totaled $201,600. There was no beginning inventory. Assume that direct labor is a variable cost.

Under absorption costing, the ending inventory for the year would be valued at: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Unit product cost under absorption costing
Direct material cost			229600
Direct labour cost			134400
Variable Mfg overheads		215600
Fixed manufacturing oh		336000
Total Product cost			915600
Divide: Units produced		28000
Unit product cost under absorption costing	32.7
Ending inventory cost under Absorption costing:
Units produced				28000
Less: Units sold				22500
Ending inventory units			5500
Multiply: Unit product cost under Absorption costing	32.7
Ending inventory cost under Absorption costing:	179850
Answer is $ 179,850