Consider the following information pertaining to a year’s operations of 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	1400
Units produced 1,600	1600
Direct labor $4,200	4200
Direct materials used 3,500	3500
Fixed manufacturing overhead 2,200	2200
Variable manufacturing overhead 300	300
Selling and administrative expenses (all fixed) 700	700
Beginning inventories 0	0
Contribution margin 5,600	5600
Direct-material inventory, end 800	800

There are no work-in-process inventories.

Instructions

1. What is the ending finished-goods inventory cost under absorption costing?

2. What is the ending finished-goods inventory cost under variable costing?

Consider the following information pertaining to a year’s operations of Youngstown Manufacturing

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