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21 April, 09:50

Gabuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations

Selling price $ 106

Units in beginning inventory 0

Units produced 2,600

Units sold 2,200

Units in ending inventory 400

Variable costs per unit:

Direct materials $46

Direct labor $28

Variable manufacturing overhead $2

Variable selling and administrative expense $7

Fixed costs:

Fixed manufacturing overhead $33,800

Fixed selling and administrative expense $8,800

What is the total period cost for the month under variable costing?

a) $42,600

b) $33,800

c) $24,200

d) $58,000

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Answers (1)
  1. 21 April, 11:13
    0
    c) $ 24,200

    Explanation:

    Computation of Total Period costs

    Fixed selling and Administrative expenses $ 8,800

    Variable Selling and Administrative costs

    $ 7 per unit * 2,200 units sold $ 15,400

    Total period costs $ 24,200

    The fixed manufacturing overhead is part of manufacturing costs so not considered.

    The variable selling and administrative costs are based on units sold and not units produced.
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