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25 January, 20:35

Sunland Company sells its product for $90 per unit. During 2019, it produced 60000 units and sold 50000 units (there was no beginning inventory). Costs per unit are: direct materials $25, direct labor $12, and variable overhead $1. Fixed costs are: $720000 manufacturing overhead, and $90000 selling and administrative expenses. Ending inventory under variable costing is

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  1. 25 January, 20:56
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    Ending inventory value = $380,000

    Explanation:

    Giving the following information:

    Costs per unit are: direct materials $25, direct labor $12, and variable overhead $1.

    Ending inventory in units = 10,000

    Under the variable costing method, the unit product cost is calculated using direct material, direct labor, and variable overhead.

    Unit product cost = 25 + 12 + 1 = $38

    Ending inventory value = 38*10,000 = $380,000
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