Castaway Company Reports the Following First Year Production Cost Information

question 27

Essay

Castaway Company reports the following first year production cost information:
$$\begin{array} { l l } \text { Units produced } & 53,000 \text { units } \\\text { Units sold } & 51,000 \text { units } \\\text { Direct labor } & \$ 8 \text { per unit } \\\text { Direct materials } & \$ 4 \text { per unit } \\\text { Variable overhead } & \$ 2,173,000 \text { in total } \\\text { Fixed overhead } & \$ 3,339,000 \text { in total }\end{array}$$
a.Compute production cost per unit under variable costing.
b.Compute production cost per unit under absorption costing.
c.Determine the cost of ending inventory using variable costing.
d.Determine the cost of ending inventory using absorption costing.

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Definitions:

Economic Efficiency

A situation where resources are allocated in the most effective way possible to meet an economy's needs and wants.

Roundabout Production

A process of investing in capital goods to enhance productivity and efficiency, typically leading to greater output in the long run.

Specialization

The process by which individuals, firms, or countries focus on producing a narrow range of products or services to gain greater efficiencies and yield higher quality or productivity.

Competitive Industry

An industry characterized by a large number of firms competing against each other, leading to innovation, lower prices, and improved products and services.