Acc561 Introduction to Management Accounting: 13-B3 Consider the (Youngstown Manufacturing)

Acc561 Introduction to Management Accounting

13-B3 Comparison of Variable Costing and Absorption Costing
Consider the following information pertaining to a year’s operations of Youngstown Manufacturing:
Units sold = 1,400
Units produced = 1,600

Direct labor = $4,200
Direct materials used = 3,500
Fixed manufacturing overhead = 2,200
Variable manufacturing overhead = 300
Selling and administrative expenses (all fixed) = 700
Beginning inventories = 0
Contribution margin = 5,600
Direct-material inventory, end = 800

There are no work-in-process inventories.

1. What is the ending finished-goods inventory cost under absorption costing?
2. What is the ending finished-goods inventory cost under variable costing?
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