Vero, Inc. began operations at the start of the current year, having a production target of 60,000 units. Actual production totaled 60,000 units, and the company sold 95% of its manufacturing output at $50 per unit. The following costs were incurred:

Required:
A. Assuming the use of variable costing, compute the cost of Vero's ending finished-goods inventory.
B. Compute the company's contribution margin. Would Vero disclose the contribution margin on a variable-costing income statement or an absorption-costing income statement?
C. Assuming the use of absorption costing, how much fixed selling and administrative cost would Vero include in the ending finished-goods inventory?
D. Compute the company's gross margin.

Question

Vero, Inc. began operations at the start of the current year, having a production target of 60,000 units. Actual production totaled 60,000 units, and the company sold 95% of its manufacturing output at $50 per unit. The following costs were incurred:
  
Required: 
A. Assuming the use of variable costing, compute the cost of Vero's ending finished-goods inventory.
B. Compute the company's contribution margin. Would Vero disclose the contribution margin on a variable-costing income statement or an absorption-costing income statement?
C. Assuming the use of absorption costing, how much fixed selling and administrative cost would Vero include in the ending finished-goods inventory?
D. Compute the company's gross margin.

Quizplus · Accepted Answer

The Answer of Vero, Inc. began operations at the start of the current year, having a production target of 60,000 units. Actual production totaled 60,000 units, and the company sold 95% of its manufacturing output at $50 per unit. The following costs were incurred:
  
Required: 
A. Assuming the use of variable costing, compute the cost of Vero's ending finished-goods inventory.
B. Compute the company's contribution margin. Would Vero disclose the contribution margin on a variable-costing income statement or an absorption-costing income statement?
C. Assuming the use of absorption costing, how much fixed selling and administrative cost would Vero include in the ending finished-goods inventory?
D. Compute the company's gross margin.

Vero, Inc Began Operations at the Start of the Current Year