Question

MindTap х X G Grammarly * My Citation I How to Cox Logout Su x Course ACX CengageN x v2.cengagenow.com/ilm/takeAssignment/take AssignmentMain.do?irwoker=&takeAssignmentSes... . D @ Calculator Inventory Valuation under Variable Costing Lane Company produced 50,000 units during its first year of operations and sold 47,300 at $12 per unit. The company chose practical activity-at 50,000 units-to compute its predetermined overhead rate. Manufacturing costs are as follows: Direct materials $123,000 Direct labor 93,000 Variable overhead 65,000 Fixed overhead 51,000 Required: 1. Calculate the cost of one unit of product under variable costing. Round your answer to the nearest cent. 2. Calculate the cost of ending inventory under variable costing Previous Next 00 202 PM 9/20/2020

Answer 1

1) $5.62

under variable costing method all fixed costs are treated as period costs and only variable costs are taken to calculate variable cost per unit of a product.

cost of one unit under variable costing=total variable costs/number of units produced

total variable costs= direct material + direct labour + variable overheads

given

direct material=$123000

direct labour=$93000

variable overheads=$65000

total variable costs= $123000+$93000+$65000=$281000

number of units produced=50000 units

cost of one unit under variable costing=$281000/50000=$5.62

2) $15174

cost of ending inventory under variable costing=ending inventory units*cost of one unit under variable costing

cost of one unit under variable costing=$5.62

ending inventory= units produced-units sold

given

units produced=50000 units

units sold=47300 units

ending inventory=50000-47300=2700 units.

cost of ending inventory under variable costing=2700*$5.62=$15174