What is the total period cost for the month under variable costing?
A)$42,000
B)$49,200
C)$35,700
D)$7,200

Question

Quizplus · Accepted Answer

The total period cost under variable costing includes only variable selling and administrative expenses and fixed manufacturing overhead.

Variable selling and administrative expenses = $1.20 per unit x 20,000 units = $24,000
Fixed manufacturing overhead = $25,200 / 7,000 units produced = $3.60 per unit x 20,000 units sold = $72,000
Total period cost = Variable selling and administrative expenses + Fixed manufacturing overhead = $24,000 + $72,000 = $96,000
However, we need to subtract the fixed selling and administrative expenses from this amount, which is $46,800.
Total period cost under variable costing = $96,000 - $46,800 = $49,200.

What Is the Total Period Cost for the Month Under