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, SOLUTION
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?
