14). Befuddled But Brilliant Old Professor Mullen\'s Gourmet Food Company sells

Question

14). Befuddled But Brilliant Old Professor Mullen's Gourmet Food Company sells its product for $60 per unit. During 2017, it produced 60,000 units and sold 50,000 units (there was no beginning inventory or BI= 0). Costs per unit are: direct materials (DM) $15, direct labor (DL) $9, and variable overhead (VOH) $3. Fixed costs are: $720,000 (FOB) manufacturing overhead, and $90,000 (S&A) selling and administrative expenses. 14. Ending inventory (El) under variable costing (V/C) is

A) $270,000.

B) $390,000.

C) $600,000.

D) $1,350,000.

Explanation / Answer

The answer is "A) $270,000"

Under variable costing only variable manufacturing costs are considered to be inventoriable cost.

So, value of ending inventory = (15+9+3) x 10,000 = $270,000

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