Alyssa Company produces a single product. Last year, the company had 16,000 units in its beginning inventory. During the year, the company's variable production costs were P6 per unit and its fixed manufacturing overhead costs were P4 per unit. The company's net operating income for the year was P24,000 higher under absorption costing than it was under variable costing. Given these facts, the number of units in the ending inventory must have been: * a. 22,000 units b. 10,000 units c. 6,000 units d. 4,000 units

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.