Kern Corporation produces a single product. Selected information concerning the

Question

Kern Corporation produces a single product. Selected information concerning the operations of the company follow Units in beginning inventory Units produced Units sold 10,eee 9,88e Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $40,000 $20,000 $12,000 $25,800 4,500 $30,000 Assume that direct labor is a varlable cost. Under absorption costing, the value of the ending finished goods inventory would be:

Explanation / Answer

Calculate value of ending finished goods inventory under absorption costing :

Under absorption costing, the value of the ending finished goods inventory would be : $9700

Direct material 40000 Direct labour 20000 Variable manufacturing overhead 12000 Fixed manufacturing overhead 25000 Total production cost 97000 Value of ending finished goods inventory (97000/10000*1000) 9700

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