Inventory Valuation under Variable Costing During the most recent year, Judson C

Question

Inventory Valuation under Variable Costing

During the most recent year, Judson Company had the following data associated with the product it makes:

Required:

1. How many units are in ending inventory?

$ _______ units

2. Using variable costing, calculate the per-unit product cost.

$

3. What is the value of ending inventory under variable costing?

$

Units in beginning inventory 300 Units produced 15,000 Units sold ($300 per unit) 12,700 Variable costs per unit: Direct materials $20 Direct labor $60 Variable overhead $12 Fixed costs: Fixed overhead per unit produced $30 Fixed selling and administrative $140,000

Explanation / Answer

1)Ending Units = Beginning Units +Units produced -Units sold

      = 300 +15000 - 12700

     = 2600 Units

2)Per Unit product cost =Direct material +Direct labor +Variable overhead

             = 20+60+12

            = $ 92 Per Unit

3)value of ending inventory under variable costing = Per unit cost* Ending units

         = 92*2600

          = $ 239,200

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