Based on the data below answer the following questions. What inventory method is being used? How many units were sold in January? February? Explain the differences between January and February Income Statements. What is the inventory value as of February 28?

Understanding Absorption Costing

Costs	Labor
F	Salary	$6,000/ mo
V	Materials	$300/ unit
	O/H	$200 / unit

COGM

January - Make 20 units*

3+3+2 = $800/unit

February - Make 10 units*

6+3+2 = $1100/unit

COGS IS GAAP ABSORPTION --->	Jan		Feb
	15,000	Rev	15,000
	8,000	COGS	11,000
	5,000	S+A	5,000
	$2,000	Profit	$ < 1,000 >	Loss