7. "A small company that produces a single product has the following cost structure."

Number of Units produced 6000

Number of Units sold 5000

Selling Price $20

Variable cost per unit:

Direct materials $2

Direct labor $4

Variable manufacturing overhead $1

Fixed costs per year:

Fixed manufacturing overhead $30.000

Fixed selling and administrative expenses $10.000

a. What is the production cost per unit under absorption costing (5 points)

b. What is the production cost per unit under variable costing (5 points)

c. What is the value of ending inventory under absorption (5 points)

d. What is the value of ending inventory under variable costing(5 points)

e. Explain why there is a difference on the value of ending inventory (15 points)