Question - Inventory Valuation under Absorption and Variable Costing
Overton Company produced 80,000 units last year. The company sold 79,000 units and there was no beginning inventory. The company chose practical activity-at 80,000 units-to compute its predetermined overhead rate. Manufacturing costs are as follows:
Direct materials - $649,640
Direct labor - 113,360
Variable overhead - 95,920
Fixed overhead - 249,392
Required:
1. Calculate the cost of one unit of product under absorption costing. Round your interim calculations and final answer to the nearest cent.
2. Calculate the cost of one unit of product under variable costing. Round your interim calculations and final answer to the nearest cent.
3. Calculate the cost of ending inventory under absorption costing.
4. Calculate the cost of ending inventory under variable costing.