Sales in units- 200,000 Production in units- 250,000 Beginning inventory- 0 Vari

Question

                    Sales in units- 200,000                 

                    Production in units- 250,000                 

                    Beginning inventory- 0                 

                    Variable production cost per unit- $1.00                 

                    Variable selling cost per unit- $0.30                 

                    Fixed production cost per year- $100,000                 

                    Fixed selling and administrative cost per year- $50,000                 

                    Selling price per unit- $3.00                 

                    How much is the cost per unit of inventory using variable costing?                 

                    a) $1.00                 

                    b) $1.30                 

                    c) $1.40                 

                    d) $1.70                 

                    (Please explain to me how you came up with the answer)

Explanation / Answer

cost per unit = VC production + VC period

= 1.1 + 0.3 = 1.4

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