Lorillard Corporation has the following information for April, May, and June 2016: Production costs per unit (based on 12,500 units) are as follows:
Direct materials $15
Direct labor 10
Variable factory overhead 7.50
Fixed factory overhead 5
Variable selling and admin. expenses 12.50
Fixed selling and admin. expenses 5
There were no beginning inventories for April 2016, and all units were sold for $50. Costs are stable over the three months.
What is the May ending inventory cost for Lorillard Corporation using the absorption costing method?
A) $44,375.00
B) $35,625.00
C) $70,000.00
D) $210,937.50

Question

Lorillard Corporation has the following information for April, May, and June 2016:  Production costs per unit (based on 12,500 units) are as follows:
Direct materials $15
Direct labor 10
Variable factory overhead 7.50
Fixed factory overhead 5
Variable selling and admin. expenses 12.50
Fixed selling and admin. expenses 5
There were no beginning inventories for April 2016, and all units were sold for $50. Costs are stable over the three months.
What is the May ending inventory cost for Lorillard Corporation using the absorption costing method?
A) $44,375.00 
B) $35,625.00 
C) $70,000.00 
D) $210,937.50

Quizplus · Accepted Answer

The Answer of Lorillard Corporation has the following information for April, May, and June 2016:  Production costs per unit (based on 12,500 units) are as follows:
Direct materials $15
Direct labor 10
Variable factory overhead 7.50
Fixed factory overhead 5
Variable selling and admin. expenses 12.50
Fixed selling and admin. expenses 5
There were no beginning inventories for April 2016, and all units were sold for $50. Costs are stable over the three months.
What is the May ending inventory cost for Lorillard Corporation using the absorption costing method?
A) $44,375.00 
B) $35,625.00 
C) $70,000.00 
D) $210,937.50

Lorillard Corporation Has the Following Information for April, May, and June