Question

Eastern Waves Co. makes paddle boards which are distributed to a variety of beach shops along the Jersey Shore. Financial information related to Eastern Waves' operations is below. During 2019, Eastern Waves produces 2,000 paddleboards and sells 1,750. For simplicity, assume no beginning inventory. What is the value of Eastern Waves' ending inventory at 12/31/19 under absorption costing?

Data ber board:     
Direct materials   $150
Direct manufacturing labor   $120
Variable manufacturing overhead   $95
Variable selling expenses   $35
      
Total cost information:     
Fixed manufacturing overhead   $200,000
Fixed administrative expenses   $250,000

      
$116,250

       
$100,000

       
$125,000

       
$91,250

Answer 1

WORKING NOTES : 1
	beginning Inventory	-	Units
	Unit Produced =	2,000	Units
	Unit Sold =	1,750	Units
	Closing Stock	250	Units
	Fixed Overhead recovery Rate =
	Fixed Manufacturing overhead	$                    2,00,000
	Divide by	"/" By
	Number of units Produced	$                          2,000
	Fixed Overhead recovery Rate =	$                             100	Per Units
WORKING NOTES : 2
	CALCUALTION OF cost of production units by using absorption and variable Costing
	Particulars	Absorption Costing Amount
	Direct Material Per unit	$                             150
	Direct Labour Per Unit	$                             120
	Vairable Manufacturing Overhead	$                                95
	Fixed Manufacturing Overhead	$                             100
	Cost of Production per unit	$                             465
SOLUTION
	Calculation of Ending value of inventory as per absorption Costing
	Ending inventory	250	Units
	Multiply By	"X" BY
	Cost of Production of per units	$                             465	Per units
	Inventory Value	$                    1,16,250
	Answer = Option 1 = $ 116,250