How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask DanielleCPA Your Own Question
DanielleCPA, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 789
Experience:  CPA experienced in tax and financial planning
Type Your Finance Question Here...
DanielleCPA is online now
A new question is answered every 9 seconds

At the end of the first year of operations, 5,200 units remained

Customer Question

At the end of the first year of operations, 5,200 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows:

Direct materials $35.00
Direct labor 16.80
Fixed factory overhead 5.60
Variable factory overhead 4.90

Determine the costs of the finished goods inventory reported on the balance sheet under
(a) the absorption costing concept and (b) the variable costing concept.
Submitted: 5 years ago.
Category: Finance
Expert:  DanielleCPA replied 5 years ago.

Hi and welcome to Just Answer! I'm happy to help answer your Finance questions. Feel free to interject at any time if you need clarification.


Under Absorption Costing, all costs are included. Under Variable costing, only variable costs are included.

A) Direct materials$35 * 5200 = 182000
B) Direct labor$16.8 * 5200 = 87360
C) Fixed FOH$5.6 * 5200 = 29120
D) Variable FOH$4.9 * 5200 = 25480


Absorption Costing = A+B+C+D = 323,960

Variable Costing = A+B+D = 294,840

DanielleCPA and other Finance Specialists are ready to help you