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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Witherspoon Company produced 20,000 units during its first year of operations and sold 19,350 units. The company chose practical activity—at 20,000 units—to com- pute its predetermined overhead rate. Manufacturing costs are as follows:
Direct materials                                              $120,600
Direct labor                                                       90,000
Expected and actual variable overhead                      26,400 Expected and actual fixed overhead                          68,000
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1.   Calculate the unit cost and the cost of finished goods inventory under absorp- tion costing.
2.   Calculate the unit cost and the cost of finished goods inventory under variable costing.
3.   What is the dollar amount that would be used to report the cost of finished goods inventory to external parties. Why?
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