Kern Corporation produces a single product. Selected information concerning the operations of the company follow:

Units in beginning inventory O

Units produced

10,000

Units sold

9,000

Direct materials

$ 40,000

Direct labor

$ 20,000

Variable manufacturing overhead

$ 12,000

Fixed manufacturing overhead

$ 25,000

Variable selling and administrative expenses $ 4,500

Fixed selling and administrative expenses $ 30.000

Assume that direct labor is a variable cost.

Under absorption costing, the value of the ending finished goods inventory would be:

O $7,200

O $7,650

O $8,000

O $9,700

To calculate the value of the ending finished goods inventory under **absorption costing**, we need to find the **unit product cost** by including **all manufacturing costs**, both variable and fixed. Then, we'll apply that unit cost to the unsold units to find the ending inventory value.

### Step-by-Step Solution

1. **Calculate Total Manufacturing Costs:**
   - Direct materials = $40,000
   - Direct labor = $20,000
   - Variable manufacturing overhead = $12,000
   - Fixed manufacturing overhead = $25,000

   **Total manufacturing costs = $40,000 + $20,000 + $12,000 + $25,000 = $97,000**

2. **Calculate Unit Product Cost:**
   Since 10,000 units were produced, we calculate the cost per unit by dividing the total manufacturing costs by the number of units produced.
   \[
   \text{Unit Product Cost} = \frac{\text{Total Manufacturing Costs}}{\text{Units Produced}} = \frac{97,000}{10,000} = 9.70
   \]

3. **Determine Ending Inventory (Unsold Units):**
   - Units produced = 10,000
   - Units sold = 9,000
   - **Ending inventory = Units produced - Units sold = 10,000 - 9,000 = 1,000 units**

4. **Calculate Value of Ending Inventory:**
   Using the unit cost calculated under absorption costing:
   \[
   \text{Ending Inventory Value} = \text{Ending Inventory Units} \times \text{Unit Product Cost} = 1,000 \times 9.70 = 9,700
   \]

### Answer
The value of the ending finished goods inventory under absorption costing is:
\[
\boxed{9,700}
\]

### Explanation
Under **absorption costing**, fixed manufacturing overhead is included in the unit product cost, so the inventory valuation reflects both variable and fixed manufacturing costs.

---

Would you like further details or have questions?

#### Related Questions
1. How would the ending inventory value change under variable costing?
2. What impact does fixed manufacturing overhead have on unit product cost?
3. How would changes in production levels affect the per-unit cost under absorption costing?
4. What is the difference in inventory valuation between absorption costing and variable costing?
5. How does selling and administrative expenses affect inventory value in absorption costing?

#### Tip
Absorption costing is typically used for external financial reporting, while variable costing is often preferred for internal management because it shows the impact of fixed costs separately.

Kern Corporation produces a single product. Selected information concerning the operations of the company follow:

Units in beginning inventory O
Units produced 10,000
Units sold 9,000
Direct materials $40,000
Direct labor $20,000
Variable manufacturing overhead $12,000
Fixed manufacturing overhead $25,000
Variable selling and administrative expenses $4,500
Fixed selling and administrative expenses $30,000

Assume that direct labor is a variable cost.

Under absorption costing, the value of the ending finished goods inventory would be:
O $7,200
O $7,650
O $8,000
O $9,700

Calculate the value of ending finished goods inventory for Kern Corporation under absorption costing. This problem covers key accounting concepts, including inventory valuation, cost accounting, and the application of absorption costing. Direct materials, labor, and overhead costs are included in the calculation, making this problem suitable for college-level accounting students.

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