Answer:
Results are below.
Explanation:
Giving the following information:
The unit manufacturing costs during the year were as follows:
Direct materials $75
Direct labor 35
Fixed factory overhead 15
Variable factory overhead 12
Number of units= 6,400
The <u>absorption costing method</u> includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
The<u> variable costing method </u>incorporates all variable production costs (direct material, direct labor, and variable overhead).
<u>Absorption method:</u>
Unit product cost= direct material + direct labor + total unitary overhead
Unit product cost= 75 + 35 + 15 + 12
Unit product cost= $137
Total ending inventory cost= 137*6,400
Total ending inventory cost= $876,800
<u>Variable costing method:</u>
Unit product cost= direct material + direct labor + variable overhead
Unit product cost= 75 + 35 + 12
Unit product cost= $122
Total ending inventory cost= 122*6,400
Total ending inventory cost= $780,800
