Answer:
$210,000
Explanation:
For computing ending inventory under absorption costing, we need to first find out the units of ending inventory, and then do the proportion to each cost.
The units of ending inventory = Units produced - units sold
= 7,200 units - 5,200 units
= 2,000 units
Now,
The material cost = Material cost × (ending inventory units ÷ units produced)
= $144,000 × (2,000 ÷ 7,200)
= $40,000
The Variable conversion cost = Variable conversion cost × (ending inventory units ÷ units produced)
= $72,000 × (2,000 ÷ 7,200)
= $20,000
The Fixed manufacturing cost = Fixed manufacturing cost × (ending inventory units ÷ units produced)
= $540,000 × (2,000 ÷ 7,200)
= $150,000
So, the ending inventory equals to
= Material cost + Variable conversion cost + Fixed manufacturing cost
= $40,000 + $20,000 + $150,000
= $210,000
