Question

he following information pertains to Stark Corporation: Beginning inventory 0 units Ending inventory 5,000 units Direct labor per unit $20 Direct materials per unit 16 Variable overhead per unit 4 Fixed overhead per unit 10 Variable selling costs per unit 12 Fixed selling costs per unit 16 What is the value of ending inventory using the absorption costing method?

Answer 1

Inventory= $220,000

Step-by-step explanation:

Giving the following information:

The following information pertains to Stark Corporation:

Beginning inventory 0 units

Ending inventory 5,000 units

Direct labor per unit $20

Direct materials per unit 16

Variable overhead per unit 4

Fixed overhead per unit 10

To calculate the unitary cost, we need to use the following formula:

Unitary cost under absorption costing= direct material + direct labor + variable manufacturing overhead + fixed manufacturing overhead

Unitary cost under absorption costing= 10 + 20 + 4 + 10= $44

Inventory= 5,000*44= $220,000