The following information relates to Charlin Industries for the year ending December 31, 2014, the company's first year of operations: $$\begin{array} { l r }
\text { Units produced } & 100,000 \
\text { Units sold } & 80,000 \
\text { Units in ending inventory } & 20,000 \
\text { Fixed manufacturing overhead } & \$ 650,000
\end{array}$$ How much fixed manufacturing overhead would be expensed in 2014 using variable costing?

Question

The following information relates to Charlin Industries for the year ending December 31, 2014, the company's first year of operations: $$\begin{array} { l r } 
\text { Units produced } & 100,000 \
\text { Units sold } & 80,000 \
\text { Units in ending inventory } & 20,000 \
\text { Fixed manufacturing overhead } & \$ 650,000
\end{array}$$ How much fixed manufacturing overhead would be expensed in 2014 using variable costing?

Quizplus · Accepted Answer

Under variable costing, all fixed manufacturing overhead is expensed in the period incurred, regardless of the number of units sold. Therefore, the entire $650,000 would be expensed in 2014.

The Following Information Relates to Charlin Industries for the Year