Question

Trio Company reports the following information for the current year, which is its first year of operations. Assume instead that Trio Company uses variable costing. Direct materials $ 12.50 per unit Direct labor $ 13.50 per unit Overhead costs for the year Variable overhead $ 8.50 per unit Fixed overhead $ 320,000 per year Units produced this year 29,500 units Units sold this year 22,500 units Ending finished goods inventory in units 7,000 unitsa) Compute the cost per unit using variable costing.

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

Answer 1

Cost per unit = $34.5

Total cost of finished goods = $241,500

Total cost of goods sold = $776,250

Step-by-step explanation:

1. Computation of cost per unit (Variable costing)

Particulars Amount

Direct materials per unit $12.50

Direct labor per unit $13.50

Variable overhead per unit $8.50

Cost per unit $34.5

2. Computation of cost of ending finished goods (Variable costing)

Total cost of finished goods = Ending finished goods x Cost per unit

Total cost of finished goods = 7,000 x $34.5

Total cost of finished goods = $241,500

3. Computation of cost of goods sold (Variable costing)

Total cost of goods sold = Units sold x Cost per unit

Total cost of goods sold = 22,500 x $34.5

Total cost of goods sold = $776,250