During the year, Xenoc produces 1,500 pairs of speakers and sells 1,200 pairs.
Xenoc produces stereo speakers. The selling price per pair of speakers is $1,800. There is no beginning inventory.
Costs involved in production are:
Direct material ......................................................................................$ 150
Direct labor ............................................................................................200
Variable manufacturing overhead ..................................................................100
Total variable manufacturing costs per unit ....................................................$ 450
Fixed manufacturing overhead per year ....................................................$600,000
In addition, the company has fixed selling and administrative costs:
Fixed selling costs per year ...................................................................$210,000
Fixed administrative costs per year ..........................................................$110,000
Required
How much fixed manufacturing overhead is in ending inventory under full costing? Compare this amount to the difference in the net incomes calculated in Exercises 5-8 and 5-9.