Woodstuff Inc. produces hardwood flooring for homes and businesses. They reported the following financial information for the previous period:
What is the per-board-foot cost of inventory produced under variable costing? Round your answer to the nearest cent.
A) $3.26
B) $3.96
C) $6.74
D) $7.99
E) None of the above

Question

Woodstuff Inc. produces hardwood flooring for homes and businesses. They reported the following financial information for the previous period:
 What is the per-board-foot cost of inventory produced under variable costing? Round your answer to the nearest cent.
A) $3.26 
B) $3.96 
C) $6.74 
D) $7.99 
E) None of the above

Quizplus · Accepted Answer

Costs applied to inventory under variable costing:
Direct Materials: 2,000 units × $2/board foot = $4,000
Direct Labor: 7.5 hours per employee × 10 employees × $25/hour = $1,875
Factory Utilities: $750 (based on power usage)
Equipment maintenance: $500 (considered a variable expense)
Total costs = $7,125
Total board feet produced in the period: 1,800
Cost per board foot = $7,125 / 1,800 board feet = $3.96/board foot