Question

The company sells golf clubs for 25 eur each. In March, 29000 pcs were sold and 29055 pcs were produced. In the beginning of March the Inventory value was 0. For the month May the following information is available:

- Direct work in minutes per golf club: 15

- Fixed sales and administration costs: 41000

- Fixed manufacturing costs: 135000

- Direct materials per golf club: 2

- Direct work costs per hour: 25

- Variable manufacturing cots per golf club: 5

- Variable sales costs per sold golf club: 2

What is the value of the inventory of finished goods at the end of March when using variable costing?

Answer 1

The value of the inventory of finished goods at the end of March using variable costing is 728.75 EUR. This is calculated by adding the variable costs per golf club and multiplying by the number of clubs in inventory.

Step-by-step explanation:

To calculate the value of the inventory of finished goods at the end of March using variable costing, we must consider only the variable costs associated with production. We calculate the costs per golf club and then multiply by the number of golf clubs in inventory at the end of March.

Direct materials cost per golf club: 2 EUR
Direct work cost per golf club (15 minutes per club/60 minutes per hour * 25 EUR per hour): 6.25 EUR
Variable manufacturing cost per golf club: 5 EUR

Adding these costs together gives us the total variable cost per golf club, which is 2 + 6.25 + 5 = 13.25 EUR.

Since 29055 golf clubs were produced and 29000 sold, there are 29055 - 29000 = 55 golf clubs in inventory.

Therefore, the value of the inventory at the end of March is 55 golf clubs * 13.25 EUR per golf club = 728.75 EUR.