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Valyn Corporation employs an absorption costing system for internal reporting purposes; however, the company is considering using variable costing. Data regarding Valyn’s planned and actual operations for the calendar year is:


























Planned Activity Actual Activity
Beginning finished goods inventory 35,000 35,000
Sales 140,000 125,000
Production 140,000 130,000

The planned per unit cost figures shown in the next schedule were based on the estimated production and
sale of 140,000 units for the year. Valyn uses a predetermined manufacturing overhead rate for applying
manufacturing overhead to its product; therefore, a combined manufacturing overhead rate of $9.00 per
unit was employed for absorption costing purposes. Any over- or underapplied manufacturing overhead is
closed to the cost of goods sold account at the end of the reporting year.




























































Planned Costs Per unit Planned Total cost Incurred Costs
Direct materials $12.00 $1,680,000 $1,560,000
Direct labor 9.00 1,260,000 1,170,000
Variable manufacturing overhead 4.00 560,000 520,000
Fixed manufacturing overhead 5.00 700,000 715,000
Variable selling expenses 8.00 1,120,000 1,000,000
Fixed selling expenses 7.00 980,000 980,000
Variable administrative expenses 3.00 420,000 425,000
Total $5000 $ 7,000,000 $6,620,000

The beginning finished goods inventory for absorption costing purposes was valued at the previous year’s
planned unit manufacturing cost, which was the same as the current year’s planned unit manufacturing
cost. There are no work-in-process inventories at either the beginning or the end ofthe year. The planned
and actual unit selling price for the current year was $70.00 per unit.
The value of Valyn Corporation’s current year actual ending finished goods inventory under
the absorption-costing basis was: