Figure 7-3
Eastwood Company has the following information for 2011: $\begin{array}{lr}
\text { Selling price } & £ 150 \text { per unit } \
\text { Variable production costs } & £ 40 \text { per unit produced } \
\text { Variable selling and admin. expenses } & £ 16 \text { per unit sold } \
\text { Fixed production costs } & £ 200,000 \
\text { Fixed selling and admin. expenses } & £ 140,000 \
\text { Units produced } & 10,000 \text { units } \
\text { Units sold } & 8,000 \text { units }
\end{array}$ There were no beginning inventories.
-Refer to Figure 7-3. What is the ending inventory for Eastwood using the variable costing method?

Question

Quizplus · Accepted Answer

Under the variable costing method, only variable production costs are included in inventory costs. The variable production cost per unit is £40, and 2,000 units (10,000 produced - 8,000 sold) are in ending inventory. Therefore, the ending inventory is 2,000 units * £40 = £80,000.

Figure 7-3 Eastwood Company Has the Following Information for 2011

Figure 7-3
Eastwood Company Has the Following Information for 2011