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?

Homework Answers

Answer #1

Answer. $10,080

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

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