Steele Corporation has the following information for January, February, and Marc
ID: 2328067 • Letter: S
Question
Steele Corporation has the following information for January, February, and March:
January
February
March
Units produced
10,000
10,000
10,000
Units sold
7,000
8,500
10,500
Production costs per unit (based on 10,000 units) are as follows:
Direct materials
$12
Direct labor
8
Variable factory overhead
6
Fixed factory overhead
4
Variable selling and admin. expenses
10
Fixed selling and admin. expenses
4
There were no beginning inventories for January, and all units were sold for $50. Costs are stable over the three months.
What is the January ending inventory for Steele Corporation using the variable costing method?
$108,000
$260,000
$78,000
$90,000
January
February
March
Units produced
10,000
10,000
10,000
Units sold
7,000
8,500
10,500
Explanation / Answer
C. $78,000
The January ending inventory for Steele Corporation using the variable costing method is:
= 3,000 × ($12 + $8 + $6)
= $78,000
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