Steele Corporation has the following information for January, February, and March 2011:
-There were no beginning inventories for January 2006, and all units were sold for $50.Costs are stable over the three months.
What is the March ending inventory for Steele Corporation using the variable costing method?

Question

Steele Corporation has the following information for January, February, and March 2011:  
-There were no beginning inventories for January 2006, and all units were sold for $50.Costs are stable over the three months.
What is the March ending inventory for Steele Corporation using the variable costing method?

Quizplus · Accepted Answer

Using the variable costing method, only variable costs are included in inventory. 
Therefore, the ending inventory for March would be:
March production: 20,000 + 30,000 - 25,000 = 25,000 units
Variable production cost per unit: $20
Ending inventory value: 25,000 x $20 = $500,000
Ending inventory for February: 25,000 units x $20 = $500,000
Ending inventory for January: 0 units
Therefore, the March ending inventory is $500,000 - $396,000 (variable production costs for March) = $104,000.

Steele Corporation Has the Following Information for January, February, and March