Question

The following information is available for Barnes Company for the fiscal year ended December 31: Beginning finished goods inventory in units 0 Units produced 7,000 Units sold 5,100 Sales $ 663,000 Materials cost $ 140,000 Variable conversion cost used $ 70,000 Fixed manufacturing cost $ 490,000 Indirect operating costs (fixed) $ 102,000 The variable costing ending inventory is:

Answer 1

The variable costing ending inventory for Barnes Company is calculated by finding the variable cost per unit (materials cost plus variable conversion cost divided by units produced) and then multiplying it by the ending inventory in units. The final variable costing ending inventory is $57,000.

Step-by-step explanation:

The student is asking for the calculation of the variable costing ending inventory for Barnes Company. To compute this, we add the cost of materials and the variable conversion cost, and then divide by the total units produced to get the variable cost per unit. Since we are given the units produced (7,000 units) and the units sold (5,100 units), we can determine the ending inventory in units (7,000 units produced - 5,100 units sold = 1,900 units in ending inventory). We then multiply this by the variable cost per unit to obtain the variable costing ending inventory.

To calculate the variable cost per unit:

• Materials cost: $140,000
• Variable conversion cost: $70,000
• Total variable costs: $140,000 + $70,000 = $210,000
• Variable cost per unit: $210,000 ÷ 7,000 units = $30 per unit

The variable costing ending inventory is therefore:

• 1,900 units in ending inventory × $30 per unit = $57,000.

Answer 2

Answer: $57,000

Step-by-step explanation:

Given that,

Beginning finished goods inventory in units = 0

Units produced = 7,000

Units sold = 5,100

Sales = $663,000

Materials cost = $140,000

Variable conversion cost used = $70,000

Fixed manufacturing cost = $490,000

Indirect operating costs (fixed) = $102,000

Total Variable cost of units produced = Materials cost + Variable conversion cost used

= $140,000 + $70,000

= $210,000

`Variable\ cost\ per\ unit = (Total\ variable\ cost)/(units\ produced)`

=
`(210,000)/(7,000)`

= $30

Units in ending inventory = Units produced - Units sold

= 7,000 - 5,100

= 1,900

Value of Variable costing ending inventory = Units in ending inventory × Variable cost per unit

= 1,900 × $30

= $57,000