A company has the following information for the current month of operations: $\begin{array}{lr}
\text { Raw materials used } & \$ 37,500 \
\text { Sales } \$ 97.50 \text { per unit) } & \$ 117,000 \
\text { Direct labor } & \$ 63,000 \
\text { Variable factory overhead } & \$ 25,500 \
\text { Fixed factory overhead } & \text { unknown } \
\text { Variable selling and administrative } & \$ 4,500 \
\text { Fixed selling and administrative } & \$ 7,500 \
\text { Gross profit } & \$ 45,000 \
\text { Contribution margin } & \text { unknown }\\
\text { Inventories: }&\text { Beginning}&\text { Ending }\
\text { Raw materials } & 0 & \$ 10,500 \
\text { WIP } & 0 & \text { none } \
\text { Finished goods } & 0 & 1,200\text { units }
\end{array}$ The ending inventory under variable costing is_____.
A)$72,000
B)$126,000
C)$63,000
D)$144,000

Question

Quizplus · Accepted Answer

Under variable costing, ending inventory is valued at variable production costs only. The variable production cost per unit is calculated by adding raw materials, direct labor, and variable factory overhead, then dividing by the number of units produced. The ending inventory is then the variable cost per unit multiplied by the number of units in ending inventory.

A Company Has the Following Information for the Current Month