A company has the following information for the current month of operations: $\begin{array}{lr}
\text { Raw materials used } & \$ 37,500 \
\text { Sales } \$ 97.50 \text { per unit) } & \$ 117,000 \
\text { Direct labor } & \$ 63,000 \
\text { Variable factory overhead } & \$ 25,500 \
\text { Fixed factory overhead } & \text { unknown } \
\text { Variable selling and administrative } & \$ 4,500 \
\text { Fixed selling and administrative } & \$ 7,500 \
\text { Gross profit } & \$ 45,000 \
\text { Contribution margin } & \text { unknown }\\
\text { Inventories: }&\text { Beginning}&\text { Ending }\
\text { Raw materials } & 0 & \$ 10,500 \
\text { WIP } & 0 & \text { none } \
\text { Finished goods } & 0 & 1,200\text { units }
\end{array}$ _____ is the inventory cost per unit using variable costing.
A)$97.50
B)$52.50
C)$56.88
D)$54.38

Question

Quizplus · Accepted Answer

Under variable costing, the inventory cost per unit includes only variable costs. The variable costs per unit are calculated as follows: Raw materials used ($37,500), Direct labor ($63,000), and Variable factory overhead ($25,500) divided by the total units sold (1,200 units). This gives a cost of $52.50 per unit.

A Company Has the Following Information for the Current Month