1) At the end of the first year of operations, 5,900 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows:

Direct materials	$40.50
Direct labor	13.70
Fixed factory overhead	6.70
Variable factory overhead	5.90

Determine the cost of the finished goods inventory reported on the balance sheet under (a) the absorption costing concept and (b) the variable costing concept.

Absorption costing	$
Variable costing	$

2) Select Audio Inc. sells electronic equipment. Management decided early in the year to reduce the price of the speakers in order to increase sales volume. As a result, for the year ended December 31, the sales increased by $24,700 from the planned level of $1,189,100. The following information is available from the accounting records for the year ended December 31.

	Actual		Planned		Increase or (Decrease)
Sales	$1,213,800		$1,189,100		$24,700
Number of units sold	28,900		25,300		3,600
Sales price	$42		$47		$(5)
Variable cost per unit	$7		$7		$0

a. Prepare an analysis of the sales quantity and unit price factors. Use a minus sign for any negative amounts.

Select Audio Inc.
Contribution Margin AnalysisSales
For the Year Ended December 31
Effect of changes in sales:
Sales quantity factor	$
Unit price factor
Total effect of changes in sales		$

b. Did the price decrease generate sufficient volume to result in a net increase in contribution margin if the actual variable cost per unit was $7, as planned?