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Genrish500 [490]
3 years ago
11

Inventory Valuation under Variable Costing

Business
1 answer:
goldenfox [79]3 years ago
5 0

Answer:

1.  Ending inventory = Beginning inventory + Production - Sales

                            = 300 units + 15,000 units - 12,700 units

                            = 2,600 units  

2. Per unit Product Cost Using Variable Costing

                                  $

Direct material         20

Direct labor              60

Variable overhead   <u>12</u>

Product cost          <u> </u><u>92</u>

3.  Value of ending inventory under variable costing

    =  2,600 units x $92

    = $239,200            

                                                                                                             

Explanation:

The units of ending inventory is calculated as beginning inventory plus  production minus sales.

Per unit product cost is the aggregate of variable cost per unit. This includes direct material cost, direct labour cost and variable overhead.

Value of ending inventory is the product of units of ending inventory and per unit product cost.

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