Use the following information for the next 4 questions.
Bella, Inc. has operated for 2 years. During that time it produced 1,000 units in year 1 and 800 in year 2, while sales were 800 units in year 1 and 900 in year 2. Variable production costs were $8 per unit during both years. The company uses last-in, first-out (LIFO) for inventory costing. The absorption costing income statements for these 2 years were:
-Cost of goods sold for year 1 using variable costing would be
A) $6,400
B) $8,800
C) $8,000
D) $7,600

Question

Use the following information for the next 4 questions.
Bella, Inc. has operated for 2 years. During that time it produced 1,000 units in year 1 and 800 in year 2, while sales were 800 units in year 1 and 900 in year 2. Variable production costs were $8 per unit during both years. The company uses last-in, first-out (LIFO) for inventory costing. The absorption costing income statements for these 2 years were: 
-Cost of goods sold for year 1 using variable costing would be
A) $6,400 
B) $8,800 
C) $8,000 
D) $7,600

Quizplus · Accepted Answer

Variable costing includes only variable manufacturing costs in the cost of goods sold. In this case, the only variable manufacturing cost is direct materials, which is $6,400.

Use the Following Information for the Next 4 Questions