During its first year of operations, Holt Manufacturing Company incurred the following costs to produce 200,000 units of its only product: Holt also incurred the following costs in the sale of 180,000 units of product during its first year: Assume that direct labor is a variable cost.
-What would be the cost per unit of Holt's finished goods inventory at the end of the first year of operations under the variable costing method?
A) $2.34
B) $2.74
C) $4.50
D) $6.30

Question

During its first year of operations, Holt Manufacturing Company incurred the following costs to produce 200,000 units of its only product:  Holt also incurred the following costs in the sale of 180,000 units of product during its first year:  Assume that direct labor is a variable cost.
-What would be the cost per unit of Holt's finished goods inventory at the end of the first year of operations under the variable costing method?
A) $2.34 
B) $2.74 
C) $4.50 
D) $6.30

Quizplus · Accepted Answer

Under variable costing, only variable production costs are included in inventory costs. The cost per unit would be calculated based on the variable costs, which is $2.34 in this case.

During Its First Year of Operations, Holt Manufacturing Company Incurred