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?

Question

Mauricio Murray

Business

3 February, 08:39

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?

+2

Answers (1)

Know the Answer?

Hassan Wiley · Answer 1

Inventory = $220,000

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