Carr Company produces a single product. During the past year, Carr manufactured 33,910 units and sold 28,100 units. Production costs for the year were as follows:

Fixed manufacturing overhead	$474,740
Variable manufacturing overhead	$284,844
Direct labor	$176,332
Direct materials	$247,543

Sales totaled $1,405,000, variable selling expenses totaled $148,930, and fixed selling and administrative expenses totaled $247,543. There were no units in beginning inventory. Assume that direct labor is a variable cost.

Under absorption costing, the ending inventory for the year would be valued at: (Do not round intermediate calculations.)

	$230,269
→	$202,769
	$264,269

	Unit
Direct materials ($247,543 ÷ 33,910 units produced)	$7.30
Direct labor ($176,332 ÷ 33,910 units produced)	5.20
Variable manufacturing overhead ($284,844 ÷ 33,910 units produced)	8.40
Fixed manufacturing overhead cost ($474,740 ÷ 33,910 units produced)	14
Absorption costing unit product cost (a)	$34.90
Units in ending inventory (b)	5,810
Value of ending inventory under absorption costing (a) × (b)	$202,769

Multiple Choice	Learning Objective: 06-01 Explain how variable costing differs from absorption costing and compute unit product costs under each method.	Learning Objective: 06-03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ.
Difficulty: Medium	Learning Objective: 06-02 Prepare income statements using both variable and absorption costing.