A business operated at 100% of capacity during its first month and incurred the

Question

A business operated at 100% of capacity during its first month and incurred the following costs:

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.$56,025

b.$78,907

c.$66,956

d.$64,121

Production costs (18,200 units): Direct materials $174,500 Direct labor 237,000 Variable factory overhead 268,200 Fixed factory overhead 98,300 $778,000 Operating expenses: Variable operating expenses $132,700 Fixed operating expenses 46,700 179,400

Explanation / Answer

Answer is a. $ 56,025

Explanation:

Variable manufacturing cost (18200 units) Material 174500 Labour 237000 Variable manufacturing OH 268200 Total Variable manufacturing cost 679700 Divide: Number of units 18200 Cost per unit under variable costing 37.35 Ending units 1500 Ending inventory valuation 56025

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