Swansea Finishing produces and sells a decorative pillow for $100.00 per unit.In the first month of operation,2,000 units were produced and 1,800 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes:
$\begin{array}{ll}
\text { Variable manufacturing costs } & \$ 23.00 \text { per unit } \
\text { Variable marketing costs } & \$ 5.00 \text { per unit } \
\text { Fixed manufacturing costs } & \$ 13 \text { per unit } \
\text { Administrative expenses, all fixed } & \$ 19.50 \text { per unit } \
\text { Ending inventories: } & \
\text { Direct materials } & -0- \
\text { WIP } &-0- \
\text { Finished goods } & 200 \text { units }
\end{array}$
What is cost of goods sold using variable costing?

Question

Swansea Finishing produces and sells a decorative pillow for $100.00 per unit.In the first month of operation,2,000 units were produced and 1,800 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes:
$\begin{array}{ll}
\text { Variable manufacturing costs } & \$ 23.00 \text { per unit } \
\text { Variable marketing costs } & \$ 5.00 \text { per unit } \
\text { Fixed manufacturing costs } & \$ 13 \text { per unit } \
\text { Administrative expenses, all fixed } & \$ 19.50 \text { per unit } \
\text { Ending inventories: } & \
\text { Direct materials } & -0- \
\text { WIP } &-0-  \
\text { Finished goods } & 200 \text { units }
\end{array}$
What is cost of goods sold using variable costing?

Quizplus · Accepted Answer

Variable costing only considers variable manufacturing costs as part of the cost of goods sold. In this case, the variable manufacturing cost is $23 per unit. Since 1,800 units were sold, the cost of goods sold using variable costing is 1,800 units * $23 per unit = $41,400.

Swansea Finishing Produces and Sells a Decorative Pillow for $100