Steele Corporation has the following information for January, February, and March:
Production costs per unit (based on 10,000 units) are as follows:
There were no beginning inventories for January, and all units were sold for $50. Costs are stable over the three months.
-Refer to Figure 8-8. What is the February ending inventory for Steele Corporation using the absorption costing method?
A) $39,000
B) $45,000
C) $135,000
D) $300,000

Question

Steele Corporation has the following information for January, February, and March:
  Production costs per unit (based on 10,000 units) are as follows:
  There were no beginning inventories for January, and all units were sold for $50. Costs are stable over the three months.
-Refer to Figure 8-8. What is the February ending inventory for Steele Corporation using the absorption costing method?
A) $39,000 
B) $45,000 
C) $135,000 
D) $300,000

Quizplus · Accepted Answer

Under the absorption costing method, ending inventory includes all manufacturing costs: direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead. The information provided in the question (Figure 8-8, which is not visible in this format) likely gives details on production costs and units produced/unsold that would lead to calculating the ending inventory value of $135,000 for February.

Steele Corporation Has the Following Information for January, February, and March