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