ACC 561 Question 13-B3 Consider the following information pertaining to a year’s operations of Youngstown Manufacturing

ACC 561 Question 13-B3 Consider the following information pertaining to a year’s operations of Youngstown Manufacturing:

13-B3 COMPARISON OF VARIABLE COSTING AND ABSORPTION COSTING PAGE 617

Introduction to Management Accounting: Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D., & Schatzberg, J. (2008).

Introduction to Management Accounting (14th ed.). Upper Saddle River, New Jersey: Pearson- Prentice Hall.

Question 13-B3,

Comparison of Variable Costing and Absorption Costing,

On p. 617

Axia College of University of Phoenix (UoP)

Question 13 B3:

13-B3 Comparison of Variable Costing and Absorption Costing

Consider the following information pertaining to a year’s operations of Youngstown Manufacturing:

Units sold 1,400 1400

Units produced 1,600 1600

Direct labor $4,200 4200

Direct materials used 3,500 3500

Fixed manufacturing overhead 2,200 2200

Variable manufacturing overhead 300 300

Selling and administrative expenses (all fixed) 700 700

Beginning inventories 0 0

Contribution margin 5,600 5600

Direct-material inventory, end 800 800

There are no work-in-process inventories.

1. What is the ending finished-goods inventory cost under absorption costing?

2. What is the ending finished-goods inventory cost under variable costing? SOLUTION