Hayes Inc. provided the following information for the current
|Variable manufacturing overhead||$||35||/unit|
|Fixed manufacturing overhead||$||49,400||/year|
|Variable selling/administrative costs||$||28||/unit|
|Fixed selling/administrative costs||$||35,500||/year|
What is the unit product cost for the year using variable costing?
During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $7 per unit, Direct labor, $5 per unit, Variable overhead, $6 per unit, and Fixed overhead, $279,000. The company produced 31,000 units, and sold 20,500 units, leaving 10,500 units in inventory at year-end. What is the value of ending inventory under absorption costing?
Answer- The unit product cost for the year using Variable costing = $126 per unit.
Explanation-Unit product cost under Variable costing= Direct materials + Direct Labor+ Variable manufacturing overhead
= $55 per unit +$36 per unit +$35 per unit
= $126 per unit
Answer- The value of ending inventory under absorption costing is = $283500.
Explanation- Value of ending inventory under absorption costing= Ending inventory units* Unit product cost under Absorption costing
= $27 per unit*10500 units
Where- Unit product cost under absorption costing = Direct materials + Direct Labor+ Variable Manufacturing overhead + Fixed Manufacturing overhead
= $7 per unit +$5 per unit +$6 per unit+ ($279000/31000 units)
= $27 per unit
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