A company produces a single product. Variable production costs are $12.20 per unit and variable selling and administrative expenses are $3.20 per unit. Fixed manufacturing overhead totals $38,000 and fixed selling and administration expenses total $42,000. Assuming a beginning inventory of zero, production of 4,200 units and sales of 3,700 units, the dollar wallue of the ending inventory under variable costing would be:

O $6,100

0 $10.600

O $7,700

O $4,500

To find the dollar value of the ending inventory under **variable costing**, we need to determine the variable production cost per unit and then apply it to the units remaining in inventory.

### Step 1: Calculate the Variable Cost per Unit
Under **variable costing**, only the variable production costs are used to value the ending inventory.

Given:
- **Variable production cost per unit** = $12.20

### Step 2: Determine the Ending Inventory Units
Since the company produced 4,200 units but sold 3,700 units, the **ending inventory** is:
\[
4,200 - 3,700 = 500 \text{ units}
\]

### Step 3: Calculate the Ending Inventory Value
The ending inventory value under variable costing is calculated by multiplying the variable production cost per unit by the number of units in ending inventory.

\[
500 \text{ units} \times 12.20 = 6,100
\]

### Answer
The dollar value of the ending inventory under variable costing is **$6,100**.

**Correct Option:**
\[
\boxed{6,100}
\]

Would you like further details, or have any questions?

---

1. What is the difference between variable and absorption costing for ending inventory?
2. How do fixed costs affect ending inventory in variable costing?
3. How would the ending inventory value change if production was higher or lower?
4. How is the total cost of goods sold calculated under variable costing?
5. Why might a company choose variable costing over absorption costing?

**Tip:** Under variable costing, only variable production costs are included in inventory valuation; fixed costs are treated as period expenses.

A company produces a single product. Variable production costs are $12.20 per unit and variable selling and administrative expenses are $3.20 per unit. Fixed manufacturing overhead totals $38,000 and fixed selling and administration expenses total $42,000. Assuming a beginning inventory of zero, production of 4,200 units and sales of 3,700 units, the dollar value of the ending inventory under variable costing would be:

O $6,100

0 $10,600

O $7,700

O $4,500

Learn how to calculate the ending inventory value using variable costing for a company producing a single product with a variable production cost of $12.20 per unit and fixed overheads. This problem includes a step-by-step solution for determining ending inventory value when production and sales quantities differ, ideal for college-level cost accounting students.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation