Answer:
Instructions are listed below
Explanation:
Giving the following information:
Variable costs per unit:
Direct materials $ 11
Direct labor $ 6
Variable manufacturing overhead $ 3
Variable selling and administrative expenses $ 6
Fixed costs per year:
Fixed manufacturing overhead $ 58,500
Fixed selling and administrative expenses $ 300,000
During the last year, 29,250 units were produced and 25,500 units were sold.
The Finished Goods inventory account at the end of the year shows a balance of $75,000 for the 3,750 unsold units.
1) Variable costing;
Unitary cost:
Direct materials $ 11
Direct labor $ 6
Variable manufacturing overhead $ 3
Total unitary cost= $20
Cost of unsold units= 20*3750= $75,000
2) Under absorbing costing:
Unitary cost:
Direct materials $ 11
Direct labor $ 6
Variable manufacturing overhead $ 3
Fixed manufacturing overhead= 58500/29250= 2
Total unitary cost= $22
Cost of ending finished goods= 22*3750= $82,500
