Cutterski Corporation manufactures a propeller.Shown below is Cutterski's cost structure: In its first year of operations, Cutterski produced 60, 000 propellers but only sold 54, 000. What is the total cost that would be assigned to Cutterski's finished goods inventory at the end of the first year of operations under variable costing?
A)$765, 000
B)$684, 000
C)$804, 000
D)$912, 000

Question

Cutterski Corporation manufactures a propeller.Shown below is Cutterski's cost structure:  In its first year of operations, Cutterski produced 60, 000 propellers but only sold 54, 000. What is the total cost that would be assigned to Cutterski's finished goods inventory at the end of the first year of operations under variable costing?
A)$765, 000 
B)$684, 000 
C)$804, 000 
D)$912, 000

Quizplus · Accepted Answer

Units in ending inventory = Units in beginning inventory + Units produced - Units sold
= 0 + 60, 000 propellers - 54, 000 propellers = 6, 000 propellers
When beginning inventory is zero and there is only a single product, the value of ending inventory can be simply computed as follows:
Value of ending inventory = Units in ending inventory × Unit product cost
= 6, 000 propellers × $114 per propeller = $684, 000

Cutterski Corporation Manufactures a Propeller