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

Question

Quizplus · Accepted Answer

Variable costing includes all variable manufacturing costs: direct materials, direct labor, variable manufacturing overhead (indirect materials, indirect labor, and other variable factory overhead). The calculation is (£14 + £8 + £4 + £6 + £10) / 1,000 units = £42 per unit.

Toshi Company Incurred the Following Costs in Manufacturing Desk Calculators