St. Martin Company has computed the following unit costs for the year just ended: $\begin{array} { l l }
\text { Direct material used } & \$ 22 \
\text { Direct labour } & 38 \
\text { Variable manufacturing overhead } & 20 \
\text { Fixed manufacturing overhead } & 25 \
\text { Variable selling and administrative cost } & 11 \
\text { Fixed selling and administrative cost } & 18
\end{array}$ Under variable costing, each unit of the company's inventory would be carried at:
A)$31.
B)$80.
C)$91.
D)$105.
E)$134.

Question

St. Martin Company has computed the following unit costs for the year just ended: $\begin{array} { l l } 
\text { Direct material used } & \$ 22 \
\text { Direct labour } & 38 \
\text { Variable manufacturing overhead } & 20 \
\text { Fixed manufacturing overhead } & 25 \
\text { Variable selling and administrative cost } & 11 \
\text { Fixed selling and administrative cost } & 18
\end{array}$ Under variable costing, each unit of the company's inventory would be carried at:
A)$31.
B)$80.
C)$91.
D)$105.
E)$134.

Quizplus · Accepted Answer

Under variable costing, inventory is valued at the sum of direct materials, direct labor, and variable manufacturing overhead. Thus, $22 (Direct Material) + $38 (Direct Labour) + $20 (Variable Manufacturing Overhead) = $80.

St Martin Company Has Computed the Following Unit Costs for the Year