Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger

Exercise 24

Inventory Valuation under Absorption and Variable Costing
Overton Company produced 80,000 units last year. The company sold 79,000 units and there was no beginning inventory. The company chose practical activity-at 80,000 units-to compute its predetermined overhead rate. Manufacturing costs are as follows:

Required:
1. Calculate the cost of one unit of product under absorption costing.
2. Calculate the cost of one unit of product under variable costing.
3. Calculate the cost of ending inventory under absorption costing.
4. Calculate the cost of ending inventory under variable costing.