Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows:
Hi-Tech started March with 1,000 cell phones that had variable costs of $28.00 per phone and fixed manufacturing costs of $2.00 per phone. Hi-Tech uses a FIFO cost flow.
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What is the value of the ending inventory on March 31, 2012 using variable costing?
A) $30,000
B) $33,000
C) $31,000
D) $32,500

Question

Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows:
 Hi-Tech started March with 1,000 cell phones that had variable costs of $28.00 per phone and fixed manufacturing costs of $2.00 per phone. Hi-Tech uses a FIFO cost flow.
-
What is the value of the ending inventory on March 31, 2012 using variable costing?
A) $30,000 
B) $33,000 
C) $31,000 
D) $32,500

Quizplus · Accepted Answer

Variable costing includes only variable production costs in inventory valuation. The ending inventory value is calculated based on the variable cost per unit and the number of units in ending inventory.

Hi-Tech Manufactures Basic Cell Phones for Cell Phone Service Providers