A company produces a single product. Variable production costs are $13.8 per uni

Question

A company produces a single product. Variable production costs are $13.8 per unit and variable selling and administrative expenses are $4.8 per unit. Fixed manufacturing overhead totals $54,000 and fixed selling and administration expenses total $58,000. Assuming a beginning inventory of zero, production of 5,800 units and sales of 4,500 units, the dollar value of the ending inventory under variable costing would be:

$17,940

$29,640

$24,180

$11,700

A company produces a single product. Variable production costs are $13.8 per unit and variable selling and administrative expenses are $4.8 per unit. Fixed manufacturing overhead totals $54,000 and fixed selling and administration expenses total $58,000. Assuming a beginning inventory of zero, production of 5,800 units and sales of 4,500 units, the dollar value of the ending inventory under variable costing would be:

Explanation / Answer

$24,180 Under Variable costing fixed costs are not part of ending inventory. In Absorption costing Fixed costs are part of ending Inventory Statement showing cost of ending inventory Particulars Amount No of units produced                            5,800.00 No of units sold                            4,500.00 Closing Inventory                            1,300.00 Variable costs: Variable production costs per unit                                  13.80 Variable S& D Costs per unit                                    4.80 Total Variable costs per unit                                  18.60 Cost of Ending inventory(1300*18.60)                          24,180.00

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