Costing Methods and Inventory Valuation

The following information is available for Keller Corporation's new product line:

Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . $15 Variable manufacturing cost per unit of production . . . . . . $8 Total annual fixed manufacturing costs . . . . . . . . . . . . . . $25,000 Variable administrative costs per unit of production . . . . . .$3 Total annual fixed selling and administrative expenses . . . $15,000

There was not inventory at the beginning of the year. During the year 12,500 units were produced and 10,000 units were sold.

Required: (a) Determine the cost ending inventory, assuming Keller uses variable costing.

(b) Determine the cost ending inventory, assuming Keller uses absorption costing.