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Uli Manufacturing produces snow shovels. The selling price per snow shovel is $29.00. There is no beginning inventory.
Costs involved in production are:
Direct material $4.00
Direct labor 4.00
Variable manufacturing overhead 2.00
Total variable manufacturing costs per unit $10.00
Fixed manufacturing overhead per year $245,250
In addition, the company has fixed selling and administrative costs of $170,800 per year. During the year, Uli produces 54,500 snow shovels and sells 49,310 snow shovels.
Problem 1: What is the value of ending inventory using full costing?
Problem 2: What is the value of ending inventory using variable costing?
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