Question

Health Center makes and sells faucets for $125.00 per unit. Direct materials are $65 per unit,...

Health Center makes and sells faucets for $125.00 per unit. Direct materials are $65 per unit, while direct manufacturing labour averages $23 per unit. Variable manufacturing overhead is $20 per unit and fixed manufacturing overhead is $420,000 per year. Administrative expenses, all fixed, run $156,000 per year, with sales commissions of $10 per part. Production is 300,000 faucets per year. And this year, 290,000 were sold.

  1. What is Home Center’s inventory cost per faucet using variable costing?
  1. What is Home Center’s inventoriable cost per unit using absorption costing?

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