Castaway Company reports the following first year production cost information:Units produced53,000 unitsUnits sold51,000 unitsDirect labor$8 per unitDirect materials$4 per unitVariable overhead$41 per unitFixed overhead$3,339,000 in totala. Compute production cost per unit under variable costing.b. Compute production cost per unit under absorption costing.c. Determine the cost of ending inventory using variable costing.d. Determine the cost of ending inventory using absorption costing.

What will be an ideal response?


a. $8 DL + $4 DM + $41 VOH = $53 per unit under variable costing
b. $53 + ($3,339,000/53,000) FOH = $116 per unit under absorption costing
c. (53,000 units - 51,000 units) × $53 per unit = $106,000 ending inv. under variable costing
d. (53,000 units - 51,000 units) × $116 per unit = $232,000 ending inv. under absorption costing

Business

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