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27 June, 09:40

A company produces a single product. Variable production costs are $12.50 per unit and variable selling and administrative expenses are $3.50 per unit. Fixed manufacturing overhead totals $41,000 and fixed selling and administration expenses total $45,000. Assuming a beginning inventory of zero, production of 4,500 units and sales of 3,850 units, the dollar value of the ending inventory under variable costing would be:

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  1. 27 June, 12:50
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    value of ending inventory under variable production is $104375

    Explanation:

    given data

    Variable production costs = $12.50 per unit

    variable selling and administrative expenses = $3.50 per unit

    Fixed manufacturing overhead totals = $41,000

    Fixed selling and administration expenses total = $45,000

    production = 4,500 units

    sales = 3,850 units

    to find out

    the dollar value of the ending inventory under variable costing would be

    solution

    we find here ending inventory that is express as

    ending inventory = production - sale

    ending inventory = 4500 - 3850

    ending inventory = 8350

    so

    variable production cost of 8350 units are

    variable production cost = 8350 * $12.50

    variable production cost = $104375

    so value of ending inventory under variable production is $104375
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