Answer:
Value of closing inventory = $69,478
Explanation:
Since the capacity is 100% utilized, therefore rate of absorption will be based accordingly.
Under absorption costing only manufacturing costs form part of cost of goods, and not the operating expenses which include, selling and distribution or administrative.
Therefore cost of goods produced =
Variable = Direct materials $182,500 + Direct labor 234,900 + Variable factory overhead 254,900 = $672,300
Fixed = Fixed factory overhead 96,300 = $96,300
Total manufacturing cost = $672,300 + $96,300 = $768,300
Number of units produced = 17,700
Cost per unit = $768,300 / 17,700 = $43.424
Value of closing inventory = $43.424 1,600 units = $69,478