Question

A company produces a single product. Variable production costs are $12.70 per unit and variable selling and administrative expenses are $3.70 per unit. Fixed manufacturing overhead totals $43,000 and fixed selling and administration expenses total $47,000. Assuming a beginning inventory of zero, production of 4,700 units and sales of 3,950 units, the dollar value of the ending inventory under variable costing would be:

Answer 1

$9,525

Step-by-step explanation:

Given the above information, first we need to calculate ending inventory

Ending inventory

= Beginning inventory + Units produced - Units sold

= 0 + 4,700 - 3,950

= 750

Therefore, the value of the ending inventory under variable costing would be;

= Ending inventory × Variable cost per unit

= 750 units × 12.70 per unit

= $9,525