Question

During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $4 per unit, Direct labor, $2 per unit, Variable overhead, $3 per unit, and Fixed overhead, $224,000. The company produced 28,000 units, and sold 19,000 units, leaving 9,000 units in inventory at year-end. What is the value of ending inventory under absorption costing

Answer 1

$153,000

Step-by-step explanation:

Value of ending inventory under absorption costing

$4 + $2 + $3 + ($224,000/28,000 units)

= $9+8 units

=17 per unit × 9,000 units

= $153,000

Therefore the value of ending inventory under absorption costing is $153,000