Fort Smith Technologies incurred the following costs during the past year when planned production and actual production each totaled 20,000 units: Fort Smith's per-unit inventoriable cost under variable costing is:
A)$9.50.
B)$25.00.
C)$28.00.
D)$33.00.
E)$40.50.

Question

Fort Smith Technologies incurred the following costs during the past year when planned production and actual production each totaled 20,000 units:  Fort Smith's per-unit inventoriable cost under variable costing is:
A)$9.50. 
B)$25.00. 
C)$28.00. 
D)$33.00. 
E)$40.50.

Quizplus · Accepted Answer

Under variable costing, only variable manufacturing costs are included in the per-unit inventoriable cost. Based on the information given in the question, the total variable manufacturing cost incurred by Fort Smith Technologies is $560,000 ($480,000 + $80,000). Dividing this amount by the planned production of 20,000 units gives a per-unit inventoriable cost under variable costing of $28.00. Therefore, the correct answer is C.

Fort Smith Technologies Incurred the Following Costs During the Past