A company produces a single product. Variable production costs are $12.60 per unit and variable selling and administrative expenses are $3.60 per unit. Fixed manufacturing overhead totals $42,000 and fixed selling and administration expenses total $46,000. Assuming a beginning inventory of zero, production of 4,600 units and sales of 3,900 units, the dollar value of the ending inventory under variable costing would be:
A) $8,820
B) $15,120
C) $11,340
D) $6,300

Question

Quizplus · Accepted Answer

Variable production costs are $12.60 per unit and variable selling and administrative expenses are $3.60 per unit. So, the total variable cost per unit is $12.60 + $3.60 = $16.20. The ending inventory is 4,600 units - 3,900 units = 700 units. So, the dollar value of the ending inventory under variable costing would be 700 units x $16.20 = $11,340.

A Company Produces a Single Product