Home Base, Inc. reports the following production cost information:Units produced97,000 unitsUnits sold92,000 unitsDirect labor$17 per unitDirect materials$34 per unitVariable overhead$26 per unitFixed overhead$1,940,000 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. $17 DL + $34 DM + $26 VOH = $77 per unit under variable costing
b. $77 + ($1,940,000/97,000) FOH = $97 per unit under absorption costing
c. (97,000 units - 92,000 units) × $77 per unit = $385,000 ending inventory under variable costing
d. (97,000 units - 92,000 units) × $97 per unit = $485,000 ending inventory under absorption costing
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