Selling Price: $15/t-shirt Variable Costs: Production (manufacturing costs): $3/

ID: 2377536 • Letter: S

Question

Selling Price: $15/t-shirt

Variable Costs:

Production (manufacturing costs): $3/t-shirt

Selling and Administration (non-mfg costs): $1/t-shirt

Fixed Costs:

Production (manufacturing costs): $1,000,000/ year

Selling and Administratioin (non-mfg cost): $2,000,000/year

Assume 400,000 t-shirts are produced and 350,000 are sold in 2011. What is ending inventory under variable costing?

a) $325,000

b) $200,000

c) $275,000

d) $150,000

(Please explan to me how you found the answer)

total cost per unit is 3 + 1 + ( 1000000 ) / 400000 = 11.5

hence the ending inventory is 50000 * 6.5 = 325,000

Hence

a) $325,000

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