The following information pertains to Guillotine Corporation: $$\begin{array} { l r }
\text { Beginning inventory } & 1,000\text { units }\
\text { Ending inventory } & 6,000 \text { units }\
\text { Direct labor per unit } & \$ 40 \
\text { Direct materials per unit } & 20 \
\text { Variable overhead per unit } & 10 \
\text { Fixed overhead per unit } & 30 \
\text { Variable selling and admin. costs per unit } & 6 \
\text { Fixed selling and admin. costs per unit } & 14
\end{array}$$
What is the value of the ending inventory using the variable costing method?
A)$240,000
B)$420,000
C)$360,000
D)$350,000

Question

The following information pertains to Guillotine Corporation: $$\begin{array} { l r } 
\text { Beginning inventory } & 1,000\text { units }\
\text { Ending inventory } & 6,000 \text { units }\
\text { Direct labor per unit } & \$ 40 \
\text { Direct materials per unit } & 20 \
\text { Variable overhead per unit } & 10 \
\text { Fixed overhead per unit } & 30 \
\text { Variable selling and admin. costs per unit } & 6 \
\text { Fixed selling and admin. costs per unit } & 14
\end{array}$$
What is the value of the ending inventory using the variable costing method?
A)$240,000
B)$420,000
C)$360,000
D)$350,000

Quizplus · Accepted Answer

Under the variable costing method, the value of ending inventory includes direct materials, direct labor, and variable overhead costs per unit. Fixed overhead and selling & administrative costs are not included in inventory costs under this method. The calculation for the ending inventory value is as follows: $$6,000 \text{ units} \times (\$20 + \$40 + \$10) = 6,000 \times \$70 = \$420,000.$$

The Following Information Pertains to Guillotine Corporation What Is the Value of the Ending Inventory Using the r