Joseph Industries Inc.reported the following information about the production and sale of its only product during the first month of operations:
$$\begin{array} { l l }
\text {Selling price per unit }&\$100.00\
\text {Sales }&\$100,000\
\text { Direct materials used}&\$ 37,000\
\text {Direct labor }&\$36,000 \
\text {Variable factory overhead}&\$25,000 \
\text {Fixed factory overhead }&\$20,000 \
\text {Variable selling and administrative expenses }&\$2,000 \
\text {Fixed selling and administrative expenses }&\$ 7,500\
\text {Ending inventory, Direct Materials }& 0\
\text {Ending inventory, Work-in-process }& 0\
\text {Ending inventory, Finished Goods }&1,200 \text { units } \
\end{array}$$
Under variable costing,what is the variable manufacturing cost of goods sold?
A) $45,000
B) $54,000
C) $101,000
D) $119,000

Question

Joseph Industries Inc.reported the following information about the production and sale of its only product during the first month of operations:
$$\begin{array} { l l } 
 \text {Selling price per unit  }&\$100.00\
\text {Sales }&\$100,000\
\text { Direct materials used}&\$ 37,000\
\text {Direct labor }&\$36,000 \
\text {Variable factory overhead}&\$25,000 \
\text {Fixed factory overhead }&\$20,000 \
\text {Variable selling and administrative expenses  }&\$2,000 \
\text {Fixed selling and administrative expenses }&\$ 7,500\
\text {Ending inventory, Direct Materials }& 0\
\text {Ending inventory, Work-in-process }& 0\
\text {Ending inventory, Finished Goods }&1,200 \text { units } \
\end{array}$$
Under variable costing,what is the variable manufacturing cost of goods sold?
A) $45,000
B) $54,000
C) $101,000
D) $119,000

Quizplus · Accepted Answer

Variable manufacturing cost of goods sold includes direct materials, direct labor, and variable factory overhead. In this case, the variable manufacturing cost of goods sold is $37,000 + $36,000 + $25,000 = $98,000. However, since the ending inventory of finished goods is 1,200 units, the variable manufacturing cost of goods sold is reduced by the variable manufacturing cost of these units. The variable manufacturing cost per unit is $37,000 + $36,000 + $25,000 / 10,000 units = $9.80. Therefore, the variable manufacturing cost of goods sold is $98,000 - (1,200 units x $9.80) = $45,000.

Joseph Industries Inc Under Variable Costing,what Is the Variable Manufacturing Cost of Goods