Fast Track Auto produces and sells an auto part for $60 per unit. In 2017, 120,000 parts were produced and 75,000 units were sold. Other information for the year includes:

What is the inventoriable cost per unit using variable costing?
A) $20
B) $25
C) $28
D) $35

Question

Fast Track Auto produces and sells an auto part for $60 per unit. In 2017, 120,000 parts were produced and 75,000 units were sold. Other information for the year includes:

What is the inventoriable cost per unit using variable costing?
A) $20 
B) $25 
C) $28 
D) $35

Quizplus · Accepted Answer

Variable costing considers all variable manufacturing costs as inventoriable costs. Therefore, in this case, direct materials, direct manufacturing labor, and variable manufacturing costs will be considered as inventoriable cost. The total inventoriable cost is $28 ($20 + $5 + $3).

Fast Track Auto Produces and Sells an Auto Part for $60