Mobile, Inc., manufactured 700 units of Product A, a new product, during the year. Product A's variable and fixed manufacturing costs per unit were $5.00 and $2.00, respectively. The inventory of Product A on December 31 of the year consisted of 100 units. There was no inventory of Product A on January 1 of the year. What would be the change in the dollar amount of inventory on December 31 if the variable costing method was used instead of the absorption costing method?

Question

Quizplus · Accepted Answer

Ending inventory under absorption costing (100 units x $7) $700
Ending inventory under variable costing (100 units x $5) 500
$200