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Hiroole Manufacturing produces snow shovels. The selling price per snow shovel is $27.00. There is no beginning inventory. Costs involved in production are:
Direct material $5.00Direct labor 5.00Variable manufacturing overhead 2.00Total variable manufacturing costs per unit $12.00Fixed manufacturing overhead per year $237,360
In addition, the company has fixed selling and administrative costs of $157,500 per year. During the year, Hiroole produces 51,600 snow shovels and sells 46,480 snow shovels.
The value of ending inventory using full costing $84,992The value of ending inventory using variable costing $61,440Variable cost of goods sold is $557,760
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