Consider the following information pertaining to a year’s operations of Youngstown Manufacturing:
Units sold 1,400
Units produced 1,600
Direct labor $4,200
Direct materials used 3,500
Fixed manufacturing overhead 2,200
Variable manufacturing overhead 300
Selling and administrative expenses (all fixed) 700
Beginning inventories 0
Contribution margin 5,600
Direct-material inventory, end 800
There are no work-in-process inventories.
1. What is the ending finished-goods inventory cost under absorption costing?
2. What is the ending finished-goods inventory cost under variable costing?

Thanks,

1. What is the ending finished-goods inventory cost under absorption costing? - 1,275: (4,200+3,500+2,200+300)x200/1600)
2. What is the ending finished-goods inventory cost under variable costing? - 1,000: (4,200+3,500+300)x200/1600)
The difference - 1,275 - 1,000 = 275 is due to fixed overheads in the inventory under absorption costing - 2,200 x 200/1600 = 275