The following information relates to Charlin Industries for the year ending December 31, 2017, the company's first year of operations: $$\begin{array} { l r }
\text { Units produced } & 100,000 \
\text { Units sold } & 80,000 \
\text { Units in ending inventory } & 20,000 \
\text { Fixed manufacturing overhead } & \$ 650,000
\end{array}$$ How much fixed manufacturing overhead would be expensed in 2017 using variable costing?
A)$520,000
B)$130,000
C)$650,000
D)$0

Question

The following information relates to Charlin Industries for the year ending December 31, 2017, the company's first year of operations: $$\begin{array} { l r } 
\text { Units produced } & 100,000 \
\text { Units sold } & 80,000 \
\text { Units in ending inventory } & 20,000 \
\text { Fixed manufacturing overhead } & \$ 650,000
\end{array}$$ How much fixed manufacturing overhead would be expensed in 2017 using variable costing?
A)$520,000
B)$130,000
C)$650,000
D)$0

Quizplus · Accepted Answer

Under variable costing, all fixed manufacturing overhead costs are expensed in the period they are incurred. Therefore, the entire $650,000 of fixed manufacturing overhead would be expensed in 2017.

The Following Information Relates to Charlin Industries for the Year