Question

Indigo Co. made 4,000 units of a product during its first year of operations and sold 3,000 units for $652,400. There was no ending work-in-process inventory. Total costs were $642,000, consisting of the following:

Direct materials and direct labour $270,000
Manufacturing overhead (45% fixed) 210,000
Selling and administrative 162,000
Calculate the cost of 1,000 units of finished goods ending inventory under actual variable costing.

Answer 1

$96,375

Step-by-step explanation:

Given that,

Variable manufacturing overhead:

= Manufacturing overhead × (1 - 45% fixed)

= 210,000 × (1 - 0.45)

= 210,000 × 0.55

= $115,500

Total variable manufacturing cost:

= Direct materials and direct labor + Variable manufacturing overhead

= $270,000 + $115,500

= $385,500

Variable manufacturing cost per unit:

= Total variable manufacturing cost ÷ Number of units

= $385,500 ÷ 4,000

= $96.375

Cost of 1,000 units of finished goods ending inventory:

= Variable manufacturing cost per unit × Number of units

= $96.375 × 1,000

= $96,375