Iagan, Inc. has collected the following data. (There are no beginning inventories.) Units produced 700 units Sales price $ 120 per unit Direct materials $ 50 per unit Direct labor $ 12 per unit Variable manufacturing overhead $ 6 per unit Fixed manufacturing overhead $ 16 comma 700 per year Variable selling and administrative costs $ 6 per unit Fixed selling and administrative costs $ 19 comma 900 per year What is the ending balance in Finished Goods Inventory using variable costing if 600 units are sold? A. $ 6 comma 800 B. $ 1 comma 800 C. $ 6 comma 200 D. $ 5 comma 000

Question

Business

Aubree Parker

14 April, 09:51

Iagan, Inc. has collected the following data. (There are no beginning inventories.) Units produced 700 units Sales price $ 120 per unit Direct materials $ 50 per unit Direct labor $ 12 per unit Variable manufacturing overhead $ 6 per unit Fixed manufacturing overhead $ 16 comma 700 per year Variable selling and administrative costs $ 6 per unit Fixed selling and administrative costs $ 19 comma 900 per year What is the ending balance in Finished Goods Inventory using variable costing if 600 units are sold? A. $ 6 comma 800 B. $ 1 comma 800 C. $ 6 comma 200 D. $ 5 comma 000

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Answers (1)

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Duncan Rivers · Answer 1

A. $ 6,800

Explanation:

The options are inconsistent with the data given.

Variable costing Method consider all variable costs as the cost of sales and fixed cost as the periodic or operational cost.

Variable Costs

Direct materials $50 per unit

Direct labor $12 per unit

Variable manufacturing overhead $6 per unit

Total Variable cost per unit $68 per unit

Ending Inventory = Production for the year - Sale in the year = 700 - 600 = 100 units

Value of Ending Inventory = $68 x 100 units = $6,800