Randy.com is a direct marketer of popular music. Following is information about

Question

Randy.com is a direct marketer of popular music. Following is information about its revenue and cost structure: Selling Price $15.00 per CD Variable Costs: Production (manufacturing costs) $3.00 per CD Selling and Administration (non-manufacturing costs) $1.00 per CD Fixed Costs: Production (manufacturing costs) $1,000,000 per year Selling and Administration (non-mfg costs) $2,000,000 per year Reference: Ref 5-5
Assume 400,000 CDs are produced and 350,000 are sold in 2008. What is ending inventory under Variable Costing? Answer
$150,000
$275,000
$200,000
$325,000 Randy.com is a direct marketer of popular music. Following is information about its revenue and cost structure: Selling Price $15.00 per CD Variable Costs: Production (manufacturing costs) $3.00 per CD Selling and Administration (non-manufacturing costs) $1.00 per CD Fixed Costs: Production (manufacturing costs) $1,000,000 per year Selling and Administration (non-mfg costs) $2,000,000 per year Reference: Ref 5-5 Assume 400,000 CDs are produced and 350,000 are sold in 2008. What is ending inventory under Variable Costing? $150,000 $275,000 $200,000 $325,000 Selling Price $15.00 per CD Variable Costs:

Explanation / Answer

Ending Inventory = 50000*3 = $150,000

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