Question

Hadley Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$	187
Units in beginning inventory		100
Units produced		1,470
Units sold		1,220
Units in ending inventory		350

Variable costs per unit:
Direct materials	$	87
Direct labor	$	33
Variable manufacturing overhead	$	5
Variable selling and administrative expense	$	8
Fixed costs:
Fixed manufacturing overhead	$	17,640
Fixed selling and administrative expense	$	28,060

What is the total period cost for the month under variable costing?

Multiple Choice

• $37,820

• $17,640

• $45,700

• $55,460

Answer 1

The total period cost for the month under variable costing is calculated below:

a) Total fixed Cost = Fixed manufacturing overhead + Fixed selling and administrative expense

= $17,640 + $28,060

= $45,700

Total fixed Cost = $45,700

b) Variable selling and administrative expense = Units Sold * Variable selling and administrative expense per unit

= 1,220 Units* $8

= $9.760

Variable selling and administrative expense = $9,760

The total period cost for the month under variable costing =Total fixed Cost + Variable selling and administrative expense.

The total period cost for the month under variable costing = $45,700 + $9,760

= $55,460

The total period cost for the month under variable costing = $55,460

So correct answer is option(4) or $55,460