INVENTORY VALUATION UNDER ABSORPTION COSTING Abile Company produced 15,000 units during its first year of operations and sold 13,800 at $22 per unit. The company chose practical activity—at 15,000 units—to compute its predetermined overhead rate. Manufacturing costs are as follows:

Direct materials $ 79,500 Direct labor 105,000 Variable overhead 15,900 Fixed overhead 51,000 Required:

. Calculate the unit cost for each of these four costs.

. Calculate the cost of one unit of product under absorption costing.

. How many units are in ending inventory?

. Calculate the cost of ending inventory under absorption costing.

Exercise