Question - Abigail Corporation produces widgets. In 2008, its first year of operations, the company produced 100,000 widgets and sold 90,000 widgets. The selling price is $70 per widget.
The production costs are
Direct Materials $10 per widget
Direct Labor $5 per widget
Variable Manufacturing Overhead $12 per widget
Fixed Manufacturing Overhead $600,000 in total
The company also had fixed selling costs of $100,000 and fixed administration costs of $150,000
Questions -
1. What is the variable cost of goods sold?
2. What is the dollar value of the widget inventory at the end of the year using full costing?
3. What is the dollar value of the widget inventory at the end of the year using variable costing?