d. $65,000 decrease 16. A business operated at 100% of its capacity during its f

Question

d. $65,000 decrease 16. A business operated at 100% of its capacity during its first month and incurred the following costs: Production costs (20,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead $180,000 240,000 280,000 100,000 $800,000 Operating expenses Variable operating expenses $130,000 Fixed operating expenses 50.000 180,000 If 1,500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? a. $62,500 b. $73,500 c. $60,000 d. $52,500

Explanation / Answer

Calculate ending inventory cost under variable costing

Ending inventory value = 1500*35 = 52500

so answer is d) $52,500

Direct material 180000 Direct labour 240000 Variable factory overhead 280000 Total variable product cost 700000 Unit produced 20000 Variable product cost per unit 35

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