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

Quizplus · Accepted Answer

To calculate the total cost assigned to Cutterski's finished goods inventory at the end of the first year of operations under variable costing, we need to use the formula:

Total cost = Direct materials + Direct labor + Variable manufacturing overhead + Variable selling and administrative expenses

From the information given, we know that Cutterski incurred direct materials costs of $250,000, direct labor costs of $150,000, variable manufacturing overhead costs of $150,000, and variable selling and administrative expenses of $34,000.

So,

Total cost = $250,000 + $150,000 + $150,000 + $34,000 
Total cost = $684,000

Therefore, the correct answer is B.

What Is the Total Cost That Would Be Assigned to Cutterski's