Kasawaki Company incurred the following costs in manufacturing digital cameras: $$\begin{array} { l r }
\text { Direct materials } & \$ 14 \
\text { Indirect materials (variable) } & 4 \
\text { Direct labor } & 8 \
\text { Indirect labor (variable) } & 6 \
\text { Other variable factory overhead } & 10 \
\text { Fixed factory overhead } & 28 \
\text { Variable selling expenses } & 20 \
\text { Fixed selling expenses } & 14
\end{array}$$ During the period, the company produced and sold 1,000 units.
What is the inventory cost per unit using variable costing?

Question

Kasawaki Company incurred the following costs in manufacturing digital cameras: $$\begin{array} { l r } 
\text { Direct materials } & \$ 14 \
\text { Indirect materials (variable) } & 4 \
\text { Direct labor } & 8 \
\text { Indirect labor (variable) } & 6 \
\text { Other variable factory overhead } & 10 \
\text { Fixed factory overhead } & 28 \
\text { Variable selling expenses } & 20 \
\text { Fixed selling expenses } & 14
\end{array}$$ During the period, the company produced and sold 1,000 units.
What is the inventory cost per unit using variable costing?

Quizplus · Accepted Answer

Variable costing includes all variable manufacturing costs: direct materials, direct labor, variable manufacturing overhead (which includes indirect materials, indirect labor, and other variable factory overhead). Thus, the calculation is $14 (direct materials) + $8 (direct labor) + $4 (indirect materials) + $6 (indirect labor) + $10 (other variable factory overhead) = $42 per unit.

Kasawaki Company Incurred the Following Costs in Manufacturing Digital Cameras