ecure https://n nnect html tice Exam -ch 6,7,8&9 12 TB MC Qu. 6-125 Hedley Corpo
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Question
ecure https://n nnect html tice Exam -ch 6,7,8&9 12 TB MC Qu. 6-125 Hedley Corporation, which has... Hadley Corporation, which has only one product, has provided the following data concerning its most recent month of operations Selling price $ 170 Units in beginning inventory Units produced Units sold Units in ending inventory 100 2,138 870 1,368 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense 30 s10 s 13 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expense $27,690 $17,400 What is the total period cost for the month under variable costing?Explanation / Answer
1) Under Variable costing, only variable costing is considered as a part of product costs and all the fixed costs are considered as period costs. The total period costs for the month is calculated as follows:-
Total Period cost = Fixed Manufacturing Overhead+Fixed Selling and Administrative expense
= $27,690+$17,400 = $45,090
2) Ending Inventory in units = Units Produced - Units Sold
= 6,020 units - 5,920 units = 100 units
Cost of ending inventory = Ending Inventory in units*Variable production cost per unit
= 100 units*$35 per unit = $3,500
Therfore the carrying value on the balance sheet of the ending inventory of finished goods under variable costing would be $3,500.
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