Question
Variable and Absorption Costing Use the following information to answer the following 2 multiple choice questions: Information taken from the accounting records of Holly Manufacturing
Variable and Absorption Costing
Use the following information to answer the following 2 multiple choice questions: Information taken from the accounting records of Holly Manufacturing for 2018:
Direct materials used | $340,000 |
Direct labour | $70,000 |
Variable manufacturing overhead | $60,000 |
Fixed manufacturing overhead | $130,000 |
Variable selling and administrative costs | $40,000 |
Fixed selling and administrative costs | $20,000 |
Units produced during the year | 40,000 |
Units in inventory at the end of the year | 6,000 |
There was no opening inventory.
Please do not give the answer only, please provide the process and calculation.
1. Based on the information (above) regarding Holly Manufacturing, calculate the value of inventory at the end of the year, assuming absorption costing is used. a) $90,000 b) $96,000 c) $72,000 d) $70,500
2. Based on the information (above) regarding Holly Manufacturing, calculate the value of inventory at the end of the year, assuming variable costing is used. a) $90,000 b) $96,000 c) $76,500 d) $70,500
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