Question

Trio Company reports the following information for the current year, which is its first year of operations. Direct materials - $ 15 per unit Direct labor - $ 16 per unit Overhead costs for the year Variable overhead - $ 80,000 per year Fixed overhead - $ 160,000 per year Units produced this year - 20,000 units Units sold this year - 14,000 units Ending finished goods inventory in units - 6,000 unitsCompute the cost per unit using variable costing.

Determine the cost of ending finished goods inventory using variable costing.
Determine the cost of goods sold using variable costing.

Answer 1

Finished Goods Inventory = $210,000

Cost of Goods Sold = $490,000

Step-by-step explanation:

Unit Cost of Goods Manufactured - Variable Costing

Direct materials $ 15.00

Direct labor $ 16.00

Overhead costs :

Variable overhead - ($ 80,000/20,000) $ 4.00

Total $ 35.00

Finished Goods Inventory = 6,000 × $ 35.00

= $210,000

Cost of Goods Sold

Cost of Goods Sold = Opening Stock of Finished Inventory + Cost of Goods Manufactured - Closing Stock of Finished Inventory

Cost of Goods Sold Calculation

Opening Stock of Finished Inventory 0

Add Cost of Goods Manufactured (20,000× $ 35.00) $700,000

Available for Sale $700,000

Less Closing Stock of Finished Inventory ($210,000)

Cost of Goods Sold $490,000