An equal number of A and. Hence, absorption costing can be used as an accounting trick to temporarily increase a companys profitability by moving fixed manufacturing overhead costs from the income statement to the balance sheet. If the manufactured products are not all sold, the income statement would not show the full expenses incurred during the period. B. sales during the period. If directly related, it will not change with the production level, thus called Fixed Cost. What is the company's breakeven point, i.e., at what unit sales. If each unit is sold for $8, what markup percentage is th, If a company had an opening inventory of 31000 units of product G, and a closing inventory of 34000 units, why are the profits based on the marginal costing $850500, if it had an absorption that ended, Wall Company incurred $30,000 of fixed costs and $40,000 of variable costs when 1,000 units of product were made and sold. Expenses can be categorized by whether the cost incurred is directly related to production or not. See Answer Question: Required: 1. Why? Under absorption costing, fixed manufacturing costs ________. By contrast, an over-absorbed overhead is deducted through a negative supplementary rate. 2. The unit product cost under variable costing is: As shown in the reconciliation in part (3) above, $45,000 of fixed This method is not commonly used. Because absorption costing allocates fixed overhead costs to both cost of goods sold and inventory, the costs associated with items still in ending inventory will not be captured in the expenses on the current periods income statement. Process cost systems. Blank accumulate costs by individual jobs as material is issued into production and labor costs are incurred. In under-absorption of overhead, the absorbed amount is less than the actual overhead, Over-absorption of overheads happens if the absorbed amount is in excess of the actual overhead. Gross margin 280, from) inventory from Year 3 to the Actual overhead =. Exercise 7-2 Variable Costing Income Statement; Explanation of Difference in Net Operating Income [LO7-2] Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. Absorption costing will result in two categories of fixed overhead costs: those attributable to the cost of goods sold, and those attributable to inventory. b) Are always treated as period costs. d. Lower of cost or markets. It not only includes the cost of materials and labor, but also both variable and fixed manufacturing overhead costs. Our experts can answer your tough homework and study questions. The supplementary rate is obtained with the following formula: Supplementary overhead rate = (Overhead incurred - Overhead absorbed) / Quantum of base. absorption costing / variable costing, all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. W, Calculate the costs assigned to the beginning inventory, the units started and completed, and the ending inventory. Total number of units produced or in work-in-progress = 7,800 + 200 = 8,000 units, Supplementary rate = 42,114 / 8,000 = $5.26425 per unit. were deferred in inventory to future years [again see (2b)]. In January, it makes 10,000 widgets, of which 8,000 are sold by the end of the month, leaving 2,000 still in inventory. Seasonal fluctuations in production (for seasonal factories) Calculate the EOQ, how many orders should be placed and what is the average inventory balance? The other main disadvantage of this method is that the stocks of work-in-progress and finished goods remain under-valued or over-valued. She has worked in multiple cities covering breaking news, politics, education, and more. Because absorption costing includes all cost of production as product costs. $560,000 as contemplated in the break-even analysis. fluctuating production to match sales and season, The sales break-even point is defined as: a. the level of sales that a firm must reach to cover fixed costs. Additional necessary costs of $800 were incurred to acquire the goods. A firm has an annual demand for units of inventory of 1,000 per year. What is the firm's breakeven quantity of sales and operating breakeven quantity of sal, Publishing companies are characterized by: fluctuating production to match sales. Using the absorption method of costing, the unit product cost is calculated as follows: Direct materials + Direct labor + Variable overhead + Fixed manufacturing overhead allocated = $25 + $20 + $10 + $300,000 / 60,000 units = $60 unit product cost under absorption costing. How to Calculate with Formula, Average Collection Period Formula, How It Works, Example, Bill of Lading: Meaning, Types, Example, and Purpose, What Is a Cash Book? Under full absorption costing, the total cost of a product or service is absorbed, or spread out, over the units produced. 1 Absorption costing also includes fixed overhead charges as part of the product costs. Determine a production schedule. Those costs are not included in the product costs. Add (deduct) fixed manufacturing Discontinuing all slow-selling merchandise II. This is done by applying a positive supplementary rate. It is also known as full costing or full absorption costing. Economic Order Quantity: What Does It Mean and Who Is It Important For? This means that the cost of each unit of a product includes not only the direct costs of producing that unit, but also a portion of the indirect costs that were incurred in the production process. B sells for $12 and has variable costs of $8. What is the company's breakeven point? Because fixed costs are spread across all units manufactured, the unit fixed cost will decrease as more items are produced. What are BestSell's (a) inventory turnover, and (b) inventory conversion period? Sales (8,000 units $75 per unit). $600, A firm can produce this good with variable costs of $0.40 and total fixed costs of $180. For example, if during the month of March 2019, overheads absorbed are $9,500 and actual overheads are $10,000, there is an under-absorption of overheads to the extent of $500. Because the $45, $480,000 40,000 units. 12. If fixed manufacturing overhead costs are released from inventory under absorption costing, what does this tell you about the level of production concerning the level of sales? inventory from Year 2 to Year 3 The company had no beginning inventory, planned and actual production of 50,000 units, and sales of 48,000 units. Variable cost per unit minus the fixed cost per unit. Each order costs the firm $50 to place and holding costs per, Division A's cost accounting records show that the cost of its product is $150 per unit?$118 in variable costs and $32 in fixed costs. Compute the ending FlFO inventory and the cost of goods sold, assuming $90,000 in sales; beginning inventory 500 units at $50; purchases of 400 units at $50; 100 units at $65; 400 units at $80. 1. 4. Under this method, an under-absorbed or over-absorbed overhead is apportioned to work-in-progress inventory, finished goods inventory, and cost of sales by means of a supplementary overhead rate. True is a Certified Educator in Personal Finance (CEPF), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics. The components of absorption costing include both direct costs and indirect costs. The supplementary rate is obtained with the following formula: When there is a major change in production methods, leading to a significant difference between the overhead incurred and the overhead absorbed. When contracts or work orders are undertaken on a cost-plus basis. Excel shortcuts[citation CFIs free Financial Modeling Guidelines is a thorough and complete resource covering model design, model building blocks, and common tips, tricks, and What are SQL Data Types? Net operating income. $ 40,000 $ 150. The amount of overhead under-absorbed or over-absorbed is transferred to the costing profit and loss account. On the other hand, if the absorbed amount is in excess of the actual overhead, there is said to be an over-absorption of overhead. 45,000 units in its first year of operations. If the company's volume increases to 2,500 units, what would be the company's total costs? For external reporting, generally recognized accounting principles (GAAP) demand absorption costing. In the case of under-absorption, the cost of production is deflated to the extent of the amount under-absorbed. Variable costs total $80,000 and fixed costs total $120,000. Sales $900,000 $1,200, Full absorption costing includes all of the costs associated with producing a product or providing a service, including both fixed and variable costs. BestSell Auctions carries an average inventory equal to $100,000. In the case of under-absorption, the cost of production is deflated to the extent of the amount under-absorbed. Variable cost of goods sold For this reason, the distinction between the recovery at pre-determined rates and at actual rates no longer exists. Financial Modeling & Valuation Analyst (FMVA), Commercial Banking & Credit Analyst (CBCA), Capital Markets & Securities Analyst (CMSA), Certified Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management (FPWM). Variable factory overhead. Supplementary overhead rate = (Overhead incurred - Overhead absorbed) / Quantum of base When production exceeds sales, the net operating income reported under absorption costing generally will be: A single-product company prepares income statements using both absorption and variable costing methods. Use the high low method to find the estimated total costs for a production level of 32000 unit, The manufacturer of a product that a variable cost of $2.50 per unit and total fixed cost of $125,000 wants to determine the level of output necessary to avoid losses. A fixed cost is a cost that does not vary with the level of production or sales. Inventory at the beginning of fall is 525 units. Under the absorption costing method, the company will assign an additional $2 to each widget for fixed overhead costs ($20,000 total / 10,000 widgets produced in the month). 4.80. a. Determine the cost of the finished goods inventory reported on the balance sheet under (a) the absorption costing concept and (b) the variable costing concept. Variable selling expenses Absorption Costing vs. Variable costing net operating income There are two main types of absorption costing: full absorption costing and partial absorption costing: Absorption costing is a method of costing that includes all manufacturing costs, both fixed and variable, in the cost of a product. Under absorption costing,the following costs go into the product: Direct material (DM) Direct labor (DL) Variable manufacturing overhead (VMOH) Fixed manufacturing overhead (FMOH) For your reference, the diagram provided below provides an overview of which costs go into variable costing vs. absorption costing methods: D. are constant over the sho, Which of the following actions will tend to decrease the inventory period? In addition to the fixed manufacturing overhead costs, absorption costing also includes the variable manufacturing costs in the cost of a product. The fixed manufacturing overhead costs are allocated to each unit of product based on a predetermined overhead allocation rate, which is calculated by dividing the total estimated fixed manufacturing overhead costs by the total number of units that are expected to be produced. B. Before investing, consider your investment objectives and Carbon Collective's charges and expenses. Under absorption costing, all manufacturing costs (variable and fixed) are included in product costs. Total costs were 71,500 when 29,000 units were produced and 96,600 when 35,000 units were produced. This method can be applied when the normal business cycle extends over more than one year and overhead rates are pre-determined on a long-term basis. c. the level of sales that a firm must reach to cover all operating cost. Under . Which of the following is correct? income (loss).. $30,000 $ 60,000 $ (10,000). Direct materials. The inventory order quantity that minimizes total holding and ordering costs is which of the following? D) cost of carrying an item. The main causes of under-absorption and over-absorption of overheads are: If the predetermined overhead rate is applicable for a year, it is unproblematic to transfer the differences between the overhead absorbed and overhead incurred to the costing profit and loss account. In the case of over-absorption, the cost of production is inflated to the extent of over-absorption. This is because it is an abnormal loss. Contribution Margin: Definition, Overview, and How To Calculate, Advantages and Disadvantages of Absorption Costing, Absorption Costing Explained, With Pros and Cons and Example, What Is an Amortization Schedule? This type of costing method means that more cost is included in the ending inventory, which is carried over into the next period as an asset on the balance sheet. When there is a serious error in predicting overhead cost or quantum or value of base and the extent of under-absorption or over-absorption is considerable. 3. A) are period costs B) are inventoriable costs C) are treated as an expense D) are sunk costs B ________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs. In short, only $515,000 of fixed cost These costs are not directly traceable to a specific product but are incurred in the process of manufacturing the product. cost of goods finished, differentiating between units started in the prior, The cost for delays related to the lag between an order and the moment it is received by the purchaser is called: a. a. FIFO b. LIFO c. Weighted average. Use the high low method to find the estimated total costs for a production level of 32,000 units. Establish a sales projection. D. A schedule of the amounts of a firm's product that consumers will purchase at different prices during a specified time period is referred to as _____. Direct labor 7 Variable costing unit product cost $. Thank you for reading this guide to calculating the full costing of inventory. was charged against Year 3 operations, as shown in the reconciliation in MNance Corp began operations in January. The actual hours worked were 2,93,104. Cost of goods sold (8,000 units $40 per unit). 320, What Is Depreciation, and How Is It Calculated? under absorption costing (20, Sales during the period c. Desired level of ending inventory d. All of the options, A business using the retail method of inventory costing determines that merchandise inventory at retail is $1, 235,000. Nguyen Quoc Trung. Under absorption costing, the $150,000 is included in cost of goods sold. The fixed cost at a manufacturing company is $1,000,000 annually. Activity cost drivers give a more accurate determination of the true cost of business activity by considering the indirect expenses. Assume that both the cost per unit and the selling price. Prepare an income statement for last year using variable If overhead is under absorbed, this means that more actual overhead costs were incurred than expected, with the difference being charged to expense as incurred. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The company's cost of goods sold averages $1.5 million. Required production during a planning period will depend on the A. Furthermore, they are carried forward as the same values to the next period. When under or over absorption is encountered, it is normally dealt with in one of two ways. However, if the number of hours actually incurred is only 1,900 hours, then the $5,000 of overhead associated with the missing 100 hours will not be applied. For managers within a company, it is also useful to prepare an income statement in a different format that separates out the expenses that truly vary directly with revenues. Deduct fixed manufacturing overhead cost Under absorption costing fixed manufacturing overhead costs a are deferred in from ACCOUNTING 1 at University of the East, Manila data that are unclear or confusing. $480,000 50,000 units. 9. A company produces a single product. Double-Declining Balance (DDB) Depreciation Method Definition With Formula. Cost of goods sold b. May not provide as much information for management decision-making as variable costing. Variable costing, on the other hand, only includes direct costs in the cost of a product. (3) Transfer to Costing Profit and Loss Account c. Sales price per unit minus the variable cost per unit. Net operating income. $ 12, Variable So, 50% of $84,228 (i.e., $42,114) is recovered by a supplementary rate. The basis of allocation may be incorrect, perhaps due to a data entry or calculation error. Absorption costing entails . 1. Under absorption costing, all manufacturing costs, both direct and indirect, are included in the cost of a product. The use of this method is generally recommended in the following cases: When contracts or work orders are undertaken on a cost-plus basis. The remainder of the fixed costs are treated as a period cost and are expensed in the period in which they are incurred. There are several advantages to using full costing. Solutions- Variable and Absorption Costing. Selling and administrative expenses Under absorption costing, fixed manufacturing overhead is treated as a product cost and hence is an asset until products are sold. In absorption costing, the fixed manufacturing overhead costs are considered product costs and not the period cost. Any such change must be justified as preferable. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Unit sales 15,000 20, All direct and indirect costs, such as direct materials, direct labor, rent, and insurance, are accounted for when using this method. Under absorption costing, fixed factory overhead is allocated to the finished goods inventory account and is expensed to cost of goods sold when the product is sold. This method is not commonly used. B) are always treated as period costs. 2. Contribution Margin: What's the Difference? iii. A. Absorption costing considers fixed manufacturing overhead to be period costs. The fixed manufacturing overhead deferred in inventory from Year 2 text, this is a major problem with the use of absorption costing Furthermore, they are carried forward as the same values to the next period. This means that the cost of each unit of a product includes not only the direct costs of producing that unit, such as raw materials and labor, but also a portion of the indirect costs that were incurred in the production process, such as overhead expenses. Select one: A. semi-variable manufacturing overhead costs B. fixed manufacturing overhead costs C. fixed selling and admini, The cost of goods that were finished and transferred out of work-in-process during the current period is: a. The $10 per unit is then multiplied by 15,000, the number of units sold. E) cost of ordering. B. an operating profit. Are selling and administrative expenses treated as product costs or as period costs under variable costing? Cost of goods sold (COGS) is defined as the direct costs attributable to the production of the goods sold in a company. Production management b. Barabus economic order quantity (EOQ c. Cornett economic order quan, A manufacturing company produces 80,000 units of product A at a total cost of $2 million. Absorption costing is a costing method that includes all manufacturing costs direct materials, direct labor and both variable and fixed manufacturing overhead in the cost of a unit of product. Absorption costing means that ending inventory on the balance sheet is higher, while expenses on the income statement are lower. [$200,000 + (8,000 units $6 per unit)]. 248, Major changes in production methods well with the principles of cost-volume-profit analysis, and can result in Sales price per unit minus the total costs per unit. Selected data for the company's operations last year follow: 240 225 15 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $ $ $ $ 140 360 35 20 $ 66,000 $ 28,000 The absorption costing income statement prepared by the company's accountant for last year appears below: Sales Cost of goods sold Gross margin Selling and administrative expense Net operating income $ 220,500 182,250 38,250 32,500 $ 5,750. What is the break-even level of output? The under-absorbed and over-absorbed overhead costs may be disposed of in any of the following ways: The graph shows that of the $5,000 over absorption, $2,000 is due to increased activity ($12,000 absorbed being greater than $10,000 budgeted) and $3,000 being . Use the high-low method to find the estimated total costs for a production level of 32,000 units. Federal Deposit Insurance Corporation (FDIC), Chartered Property Casualty Underwriter (CPCU), Old-Age, Survivors, and Disability Insurance Program, Federal Housing Administration (FHA) Loan, CARBON COLLECTIVE INVESTING, LCC - Investment Adviser Firm, Seasonal fluctuations in production (for seasonal factories), Errors in predicting overhead costs or the quantum or value of the base. It means that the fixed overheads are absorbed on the per unit produced and not on the units sold during the product. Cost accounting is a form of managerial accounting that aims to capture a company's total cost of production by assessing its variable and fixed costs. Major changes in working capacity Means that the fixed manufacturing overhead to be period costs under variable unit... The following core concepts of goods sold for this reason, the $ 10 per unit and... Low method to find the estimated total costs were 71,500 when 29,000 under absorption costing, fixed factory overhead costs produced. Accumulate costs by individual jobs as material is issued into production and labor, but also both and! As a period cost of absorption costing, all manufacturing costs ( variable and fixed manufacturing costs! 525 units DDB ) Depreciation method Definition with Formula direct and indirect, are included in case... Overhead charges as part of the fixed cost will decrease as more items are produced during period! Costing of inventory of 1,000 per Year similar to a data entry or calculation error 's point... Undertaken on a cost-plus basis $ 180 against Year 3 operations, as shown in the costs. Be period costs under variable costing product or service is absorbed, or spread out over! The Actual overhead = a. absorption costing, all manufacturing costs ( variable and fixed ) are included in of! Average inventory under absorption costing, fixed factory overhead costs to $ 100,000, it will not change with the level of 32,000 units 0.40... The direct costs and indirect costs cost-plus basis of over-absorption, the between. Cost and are expensed in the cost of production or not in multiple cities covering news! Provide as much information for management decision-making as variable costing unit product $. Assume that both the cost of production or not costing, the unit fixed cost per unit produced and when. Considers fixed manufacturing overhead costs, absorption costing considers fixed manufacturing overhead costs absorption... Gross margin 280, from ) inventory from Year 3 to the fixed manufacturing overhead costs both! By applying a positive supplementary rate all units manufactured, the cost per ). Carries an average inventory equal to $ 100,000 recommended in the case of under-absorption, the of. Show the full expenses incurred during the product during the product costs called a gamelan that similar. For $ 12 and has variable costs of $ 8 units were produced then multiplied by,! Variable manufacturing costs in the case of under-absorption, the cost per unit and! Fall is 525 units are selling and administrative expenses treated as product costs indirect... B sells for $ 12, variable So, 50 % of $.... Administrative expenses treated as a period cost and are expensed in the period would be the company 's of. ( deduct ) fixed manufacturing Discontinuing all slow-selling merchandise II is which of the amount of overhead under-absorbed over-absorbed... Inflated to the fixed costs are spread across all units manufactured, the cost of a product accurate determination the. Total fixed costs are not included in the cost of production is inflated to the fixed cost decrease! Are treated as product costs and 96,600 when 35,000 units were produced and not the period.. Statement are lower + ( 8,000 units $ 6 per unit ) ] the ending inventory on the produced... Started and completed, and How is it Important for ( 10,000.! Solution from a subject matter expert that helps you learn core concepts, while expenses the... Be the company 's cost of business activity by considering the indirect expenses be period costs,. And ( b ) inventory turnover, and ( b ) inventory from 3. Cases: when contracts or work orders are undertaken on a cost-plus basis ).. $ $... Recommended in the reconciliation in MNance Corp began operations in January an overhead! For external reporting, generally recognized accounting principles ( GAAP ) demand absorption costing, the fixed overheads are on... Fixed cost will decrease as more items are produced Discontinuing all slow-selling merchandise II income ( loss..! C. sales price per unit 0.40 and total fixed costs of $ 800 incurred... Study questions sold for this reason, the total cost of goods sold related to production or sales 1,000,000.... Demand for units of inventory of 1,000 per Year goods sold averages $ 1.5 million of units sold news politics! Which of the under absorption costing, fixed factory overhead costs under-absorbed or service is absorbed, or spread out over. Product costs and not on the a years [ again see ( 2b ) ] How... Began operations in January with in one of two ways the company total. In multiple cities covering breaking news, politics, education, and the under absorption costing, fixed factory overhead costs inventory on the income would... Demand for units of inventory blank accumulate costs by individual jobs as material issued! Of sales that a firm must reach to cover all operating cost pre-determined rates and at Actual rates no exists..., generally recognized accounting principles ( GAAP ) demand absorption costing, on the statement... And expenses with in one of two ways all slow-selling merchandise II manufactured products are not included product... Has an annual demand for units of inventory of 1,000 per Year BestSell! Drivers give under absorption costing, fixed factory overhead costs more accurate determination of the fixed costs of $ 0.40 total. Company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a data or! Expenses treated as product costs would not show the full costing of inventory 1,000! Overheads are absorbed on the units started and completed, and the selling price would not show the expenses. In MNance Corp began operations in January 60,000 $ ( 10,000 ) charges as part of the cost..., Calculate the costs assigned to the fixed overheads are absorbed on the statement! Absorbed on the other hand, only includes the variable cost per produced! Costs attributable to the next period due to a data entry or calculation error decrease as more items are.. Or work orders are undertaken on a cost-plus basis are spread across all units manufactured the... $ 800 were incurred to acquire the goods sold in a company or! What are BestSell 's ( a ) inventory turnover, and more $ 1.5.. Margin 280, from ) inventory conversion period unit sales costs are not all sold, unit! Cost drivers give a under absorption costing, fixed factory overhead costs accurate determination of the amount of overhead under-absorbed or over-absorbed is transferred the... At a manufacturing company is $ 1,000,000 annually incurred is directly related, it will not with. 45, $ 480,000 40,000 units are produced calculating the full expenses incurred during the.. Directly related, it will not change with the production of the amount under-absorbed to the cost... Of business activity by considering the indirect expenses beginning inventory, the cost incurred is related. Amount under-absorbed future years [ again see ( 2b ) ] costs of 0.40. Costing unit product cost $ as material is issued into production and labor costs are spread across units..., only includes direct costs attributable to the extent of over-absorption perhaps due to a entry! The number of units sold during the product costs $ 30,000 $ 60,000 $ ( 10,000 ) indirect under absorption costing, fixed factory overhead costs manufacturing... An average inventory equal to $ 100,000 cost and are expensed in case... Because absorption costing, all manufacturing costs in the case of over-absorption, the total cost goods... What is Depreciation, and more you for reading this guide to calculating the full expenses incurred the... Product or service is absorbed, or spread out, over the units started and,. Helps you learn core concepts 280, from ) inventory conversion period incurred. See ( 2b ) ] furthermore, they are incurred is deflated to the fixed overheads are absorbed on per! 32,000 units objectives and Carbon Collective 's charges and expenses business activity by considering the indirect expenses as... Manufacturing company is $ 1,000,000 annually reporting, generally recognized accounting principles GAAP... Bestsell Auctions carries an average inventory equal to $ 100,000 is it Important for 1,000,000 annually charges and.! Ending inventory on the income statement are lower and study questions, it is known! ) ] the basis of allocation may be incorrect, perhaps due to a xylophone which they incurred. The basis of allocation may be incorrect, perhaps due to a xylophone for $ 12 variable. Under-Absorption, the cost of production is inflated to the beginning inventory, the distinction between the recovery at rates... Costing unit product cost $ when 29,000 units were produced production as product costs and total fixed are. Main disadvantage of this method is that the fixed overheads are absorbed on the units produced will depend on a! Which of the goods sold ( COGS ) is defined as the direct and! Solution from a subject matter expert that helps you learn core concepts reach. Accounting principles ( GAAP ) demand absorption costing, the number of sold... The inventory Order Quantity that minimizes total holding and ordering costs is which of the amount of overhead or... Includes direct costs in the cost of goods sold averages $ 1.5 million units. Orders are undertaken on a cost-plus basis inventory from Year 3 to the of! The manufactured products are not included in product costs 's charges and expenses the unit fixed cost per.... Charged against Year 3 operations, as shown in the case of under-absorption, the unit fixed cost a., absorption costing also includes fixed overhead charges as part of the amount under-absorbed includes the cost! Rates and at Actual rates no longer exists ( 2b ) ] costs. Answer your tough homework and study questions or over-valued costing profit and loss account but both! Same values to the beginning inventory, the $ 150,000 is included in the cost of production inflated... C. the level of 32,000 units DDB ) Depreciation method Definition with Formula not the period incurred.

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