Comparison of Variable Costing and Absorption Costing Youngstown Manufacturing

Comparison of Variable Costing and Absorption Costing Youngstown Manufacturing

Acc 561 Week 513-B3 Youngstown Manufacturing

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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