Question

Sheffield Corp. sells its product for $70 per unit. During 2019, it produced 60000 units and sold 50000 units (there was no beginning inventory). Costs per unit are: direct materials $15, direct labor $12, and variable overhead $1. Fixed costs are: $720000 manufacturing overhead, and $90000 selling and administrative expenses. Ending inventory under variable costing is $1400000. $700000. $400000. $280000.

Answer 1

Answer: $280,000

Step-by-step explanation:

First find the ending inventory;

= Beginning inventory + Units Produced - Units sold

= 0 + 60,000 - 50,000

= 10,000 units

The find the Variable costs per unit;

= Direct materials + Direct labor - Variable overhead

= 15 + 12 + 1

= $28

Ending inventory under variable costing = 10,000 * 28

= $280,000