Absorption Costing, Value of Ending Inventory, Operating Income 5.00 Pattison Products, Inc., began operations in October and manufactured 58,000 units during the month with the following unit costs: Direct materials $7.00 Direct labor Variable overhead 2.50 Fixed overhead* 9.00 Variable marketing cost 2.20 Fixed overhead per unit = $522,000 / 58,000 units produced = $9 Total fixed factory overhead is $522,000 per month. During October, 56,300 units were sold at a price of $28.50, and fixed marketing and administrative expenses were $126,700. Required: 1. Calculate the cost of each unit using absorption costing. Round your final answer to the nearest cent. 25.7 X per unit 2. How many units remain in ending inventory? 1,700 units What is the cost of ending inventory using absorption costing? 43,690 x Feedback Check My Work 1. Absorption costing assigns all manufacturing costs (fixed and variable) to each unit produced. 2. Beginning inventory + Units Produced - Units Sold = Ending inventory Cost per unit x total units not sold = cost of ending inventory. ariable marketing cost * Fixed overhead per unit = $522,000 / 58,000 units produced = $9 Total fixed factory overhead is $522,000 per month. During October, 56,300 units were sold at a price of $28.50, and fixed marketing and administrative expenses were $126,700. Required: 1. Calculate the cost of each unit using absorption costing. Round your final answer to the nearest cent. 25.7 X per unit 2. How many units remain in ending inventory? 1,700 units What is the cost of ending inventory using absorption costing? 43,690 X Feedback Check My Work 1. Absorption costing assigns all manufacturing costs (fixed and variable) to each unit produced. 2. Beginning inventory + Units Produced - Units Sold = Ending inventory Cost per unit x total units not sold = cost of ending inventory. 3. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October. Pattison Products, Inc. Absorption-Costing Income Statement For the Month of October Sales 1,604,550 Less: Cost of goods sold 1,446,910 x Check My Work Next 3. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October. Pattison Products, Inc. Absorption-Costing Income Statement For the Month of October Sales 1,604,550 Less: Cost of goods sold 1,446,910 x Gross profit 3,051,460 x Less: Variable marketing expenses Fixed marketing and administrative expenses 126,700 Operating income Feedback Check My Work 3. Absorption costing assigns all manufacturing costs (fixed and variable) of products sold as COGS. 4. What if November production was 58,000 units, costs were stable, and sales were 59,000 units? What is the cost of ending inventory? What is operating income for November? Feedback Check My Work 4. Remember the matching principle - sales and COGS are both based on the same number of units. You can't expense the cost of a unit until it is sold