Required:Compute the ending inventory (February) under variable costing.Compute the ending inventory (February) under absorption costing. Everlasting Co. has the following data pertaining to its 1st quarterof operations:Activity level - unitsProductionSalesJanuary February10,00010,000March10,0007,00010,00011,000Cots incurred in the different areas of operation were as follows:PerPerunitP 201512monthDirect MaterialsDirect LaborVariable factoryoverheadFixed factory overheadVariable selling andadministrativeFixed selling andadministrativeP60,000530,000Fixed factory overhead costs per month are based on thecompany's normal capacity of 10,000 units. The company sellsthe product at P75 per unit.

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Description: Required:Compute the ending inventory (February) under variable costing.Compute the ending inventory (February) under absorption costing. Everlasting Co. has the following data pertaining to its 1st quarterof operations:Activity level - unitsProducti

Here in this question, we are required to calculate closing stock for the month of February by…

Answered: Required: Compute the ending inventory…

Business

Accounting

Required: Compute the ending inventory (February) under variable costing. Compute the ending inventory (February) under absorption costing.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

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Question

Required:

Compute the ending inventory (February) under variable costing.
Compute the ending inventory (February) under absorption costing.

Everlasting Co. has the following data pertaining to its 1st quarter
of operations:
Activity level - units
Production
Sales
January February
10,000
10,000
March
10,000
7,000
10,000
11,000
Cots incurred in the different areas of operation were as follows:
Per
Per
unit
P 20
15
12
month
Direct Materials
Direct Labor
Variable factory
overhead
Fixed factory overhead
Variable selling and
administrative
Fixed selling and
administrative
P60,000
5
30,000
Fixed factory overhead costs per month are based on the
company's normal capacity of 10,000 units. The company sells
the product at P75 per unit.

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