Crystal Company produces a single product. The company's variable costing income statement for the month of May appears below: The company produced 80,000 units in May and the beginning inventory consisted of 25,000 units. Variable production costs per unit and total fixed costs have remained constant over the past several months.
-The dollar value of the company's inventory on May 31 under the absorption costing method would be:
A) $120,000
B) $90,000
C) $75,000
D) $60,000

Question

Crystal Company produces a single product. The company's variable costing income statement for the month of May appears below:  The company produced 80,000 units in May and the beginning inventory consisted of 25,000 units. Variable production costs per unit and total fixed costs have remained constant over the past several months.
-The dollar value of the company's inventory on May 31 under the absorption costing method would be:
A) $120,000 
B) $90,000 
C) $75,000 
D) $60,000

Quizplus · Accepted Answer

Under absorption costing, inventory is valued by including all manufacturing costs: direct materials, direct labor, and both variable and fixed manufacturing overhead. The dollar value of the inventory would be the total of these costs for the units in inventory.

Crystal Company Produces a Single Product