Calculate the value of the ending inventory using both absorption costing and variable costing. Two Questions.

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Biff Enterprises, Inc. reports the following information:

	2009	2010	2011

Units sold	20,000	20,000	20,000
Units produced	20,000	24,000	16,000
Fixed production costs	$1,200,000	$1,200,000	$1,200,000
Variable production costs per unit	$ 200	$ 200	$ 200
Selling price per unit	$ 400	$ 400	$ 400
Fixed selling and administrative expenses	$ 400,000	$ 400,000	$ 400,000

Calculate the value of the ending inventory using both absorption costing and variable costing.

Gigantic Company reports the following information for 2011:

Beginning inventory	0
Units produced	40,000
Units sold	38,000
Ending inventory	2,000

Variable costs per unit:
Manufacturing:
Direct materials	$100
Direct labor	$ 160
Manufacturing overhead	$ 40
Selling/administrative	$ 10
Total variable costs per unit	$ 310

Fixed costs:
Manufacturing overhead		$700,000
Selling and administrative		$200,000
Total fixed costs		$900,000