Using direct and absorption costing Lo The following production data came from the records of Athletic Enterprises

' for the year ended December 3 1 , 2002:

Materials $480,000 Labor 260,000 Variable factory overhead 44,000 Fixed factory overhead 36,800 During the year, 40,000 units were manufactured but only 35,000 units were sold.

Determine the effect on inventory valuation by computing the following:

1. Total inventoriable costs and the cost of the 35,000 units sold and of the 5,000 units in the ending inventory, using direct costing.

2. Total inventoriable costs and the cost of the 35,000 units sold and of the 5,000 units in the ending inventory, using absorption costing.