Crystal Corporation produces a single product. The company\'s variable costing i

Question

Crystal Corporation produces a single product. The company's variable costing income statement for the month of May appears below: Crystal Corporation Income Statement For the month ended May 31 $1,261,000 Sales ($10 per unit) Variable expenses: 630,500 126,100 756,600 504,400 Variable cost of goods sold Variable selling expense Total variable expenses Contribution margin Flxed expenses: 313,600 126,100 439,700 $64,700 Fixed manufacturing overhead Fixed selling and administrative Total fixed expenses Net operating income The company produced 112,000 units in May and the beginning inventory consisted of 36,000 units. Variable production costs per unit and total fixed costs have remained constant over the past several months. The value of the company's inventory on May 31 under absorption costing would be $170,820 O $109,500 O $181160 O $87600

Explanation / Answer

Calculate unit product cost for absorption costing :

Value of ending inventory = (36000+112000-126100)*7.8 = 170820

So answer is a) $170820

Variable cost per unit (630500/126100) 5 FIxed cost per unit (313600/112000) 2.8 Unit product cost 7.8

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