Question

The following information is available for Barnes Company for the fiscal year ended December 31: Beginning finished goods inventory in units 0 Units produced 7,000 Units sold 5,100 Sales $ 663,000 Materials cost $ 140,000 Variable conversion cost used $ 70,000 Fixed manufacturing cost $ 490,000 Indirect operating costs (fixed) $ 102,000 The variable costing ending inventory is:

Answer 1

Answer:  $57,000

Explanation:

Given that,

Beginning finished goods inventory in units = 0

Units produced = 7,000

Units sold = 5,100

Sales = $663,000

Materials cost = $140,000

Variable conversion cost used = $70,000

Fixed manufacturing cost = $490,000

Indirect operating costs (fixed) = $102,000

Total Variable cost of units produced = Materials cost + Variable conversion cost used

                                                               = $140,000 + $70,000

                                                               = $210,000

$Variable\ cost\ per\ unit = \frac{Total\ variable\ cost}{units\ produced}$

                                               =$\frac{210,000}{7,000}$

                                               = $30

Units in ending inventory = Units produced - Units sold

                                          = 7,000 - 5,100

                                          = 1,900

Value of Variable costing ending inventory = Units in ending inventory × Variable cost per unit

                                                                        = 1,900 × $30

                                                                        = $57,000