Figure 8-8. Steele Corporation has the following information for January,February,and March 2011:
Production costs per unit (based on 10,000 units)are as follows:
There were no beginning inventories for January 2011,and all units were sold for $50.Costs are stable over the three months.
Refer to Figure 8-8.What is the January ending inventory for Steele Corporation using the variable costing method?
A)$260,000
B)$78,000
C)$108,000
D)$90,000

Question

Figure 8-8. Steele Corporation has the following information for January,February,and March 2011:
 Production costs per unit (based on 10,000 units)are as follows:
 There were no beginning inventories for January 2011,and all units were sold for $50.Costs are stable over the three months.
Refer to Figure 8-8.What is the January ending inventory for Steele Corporation using the variable costing method?
A)$260,000 
B)$78,000 
C)$108,000 
D)$90,000

Quizplus · Accepted Answer

Using the variable costing method, ending inventory consists only of variable manufacturing costs. The variable manufacturing costs per unit are $18 in January, $16 in February, and $14 in March. To calculate the January ending inventory, we need to calculate the number of units produced in January, which is given as 10,000. From these 10,000 units, we subtract the units sold in January, which is also given as 10,000. This leaves us with 0 units in ending inventory for January. 
Therefore, the January ending inventory for Steele Corporation using the variable costing method is $0.