Question

What is the value of per unit of inventory if the firm uses absorption costing? Direct material cost per unit = Rs.3 Direct Labour cost per unit = Rs.4 Variable overheads are absorbed as 50% of direct labour cost Fixed production overheads = Rs.120,000 Budgeted production = 20,000 units

Q: Answer-What is the value of per unit of inventory if the firm uses absorption costing? Direct material cos...

Absorption costing valuation of inventory fixed cost variable cost Here, variable cost direct material direct labour variable OH 3 4 50 of 4 9 Fixed cost per unit Fixed production overheads Budgeted production 120000 20000 6 Therefore, value of inventory as per absorption costing 9 6 Rs.15 per unit