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Managerial Accounting - 2

This document provides information about inventory valuation under absorption and variable costing. It details the costs of direct materials, direct labor, variable overhead, and fixed overhead for a company that produced 50,000 units and sold 47,300 units. It then shows the calculations to determine the cost per unit and ending inventory value under variable costing. A similar second example is provided with additional information about beginning inventory, units produced and sold, and ending inventory to calculate cost per unit and ending inventory value under both absorption and variable costing.

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Layla Afidati
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231 views2 pages

Managerial Accounting - 2

This document provides information about inventory valuation under absorption and variable costing. It details the costs of direct materials, direct labor, variable overhead, and fixed overhead for a company that produced 50,000 units and sold 47,300 units. It then shows the calculations to determine the cost per unit and ending inventory value under variable costing. A similar second example is provided with additional information about beginning inventory, units produced and sold, and ending inventory to calculate cost per unit and ending inventory value under both absorption and variable costing.

Uploaded by

Layla Afidati
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Exercise 8-23 Inventory Valuation under Variable Costing

Lane Company produced 50,000 units during its first year of operations and sold 47,300 at
$12 per unit. The company chose practical activity—at 50,000 units—to compute its
predetermined overhead rate. Manufacturing costs are as follows:
Direct materials $123,000
Direct labor 93,000
Variable overhead 65,000
Fixed overhead 51,000

Required:
1. Calculate the cost of one unit of product under variable costing.
DM + DL+VO $ 123,000+ $ 93,000+ $ 65,000 $ 281,000
= = =$ 5.62/unit
Unit produced 50,000 units 50,000 units

2. Calculate the cost of ending inventory under variable costing.


Ending inventory = unit produced – unit sold
= 50,000 units – 47,300 units
= 2,700 units

Cost of ending inventory = ending inventory x unit cost


= 2,700 units x $5.62/unit
= $15,174

Exercise 8-26 Inventory Valuation under Absorption and Variable Costing with Decrease in
Ending Inventory
The following information pertains to Chacon Inc. for last year:
Beginning inventory in units 5,000
Units produced 20,000
Units sold 23,700
Costs per unit:
Direct materials $8.00
Direct labor $4.00
Variable overhead $1.50
Fixed overhead* $4.15
Variable selling expenses $3.00
Fixed selling and administrative expenses $24,300
* Fixed overhead totals $83,000 per year.
Required:
1. Calculate the cost of one unit of product under absorption costing.
DM, DL, VO, dan FO sudah diketahui dalam unit cost, sehingga tidak perlu dibagi dengan
unit produced.
DM + DL + VO + FO = $8.00 + $4.00 + $1.50 + $4.15
= $17.65/unit

2. Calculate the cost of one unit of product under variable costing.


DM, DL, dan VO sudah diketahui dalam unit cost, sehingga tidak perlu dibagi dengan unit
produced.
DM + DL + VO = $8.00 + $4.00 + $1.50
= $13.50/unit

3. How many units are in ending inventory?


Beginning inventory 5,000 units
Units produced 20,000 units
Units sold (23,700 units)
Ending inventory 1,300 units

4. Calculate the cost of ending inventory under absorption costing.


Cost of ending inventory = ending inventory x unit cost
= 1,300 units x $17.65/unit
= $22.945

5. Calculate the cost of ending inventory under variable costing.


Cost of ending inventory = ending inventory x unit cost
= 1,300 units x $13.50/unit
= $17,550

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