Question

1) Doon Company incurred the following costs while producing 560 ​units: direct​ materials, $9 per​ unit;...

1)

Doon Company incurred the following costs while producing 560 ​units: direct​ materials, $9 per​ unit; direct​ labor, $30 per​ unit; variable manufacturing​ overhead, $14 per unit; total fixed manufacturing overhead​ costs, $11,200​; variable selling and administrative​ costs, $3 per​ unit; total fixed selling and administrative​ costs, $7,280. There are no beginning inventories.

What is the ending balance in Finished Goods Inventory using variable costing if 400 units are​ sold?

Business   Accounting   
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Answer #1

Answer : $8,480

Explanation :

Unit product cost using variable costing :

= Direct materials + Direct labor + Variable manufacturing overhead

= $9 + $30 + $14

= $53 per unit

Units left in Ending Inventory = Units Produced - Units Sold

= 560 units - 400 units

= 160 units

Ending Balance in Finished Goods Inventory = Units in Ending Inventory × Unit product cost using variable costing

Ending Balance in Finished Goods Inventory = 160 units × $53 per unit

Ending Balance in Finished Goods Inventory = $8,480 .

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