Question

​McFarlane, Inc. reports the following​ information: Units produced 580 units Units sold 400 units Sales price...

​McFarlane, Inc. reports the following​ information:

 Units produced 580 units Units sold 400 units Sales price \$ 160 per unit Direct materials \$ 29 per unit Direct labor \$ 12 per unit Variable manufacturing overhead \$ 15 per unit Fixed manufacturing overhead \$ 17800 per year Variable selling and administrative costs \$ 6 per unit Fixed selling and administrative costs \$ 13900 per year

There are no beginning inventories. What is the ending balance in Finished Goods Inventory using variable​ costing?

Working:

In the valuation of the finished inventory using the variable costing, only the direct material, direct labor, variable manufacturing overhead needed to be considered for the calculation of the cost of the value

Statement showing cost per unit under variable costing method:

 Direct materials \$29 Direct labor \$12 Variable manufacturing overhead \$15 Total cost per unit \$56

So Ending Finished Goods Inventory = Unsold units × Total unit product cost = (580 units produced - 400 units sold) × \$56 = \$10,080