Question

Hadley Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 185 Units in beginning inventory 100 Units produced 1,970 Units sold 1,380 Units in ending inventory 690 Variable costs per unit: Direct materials $ 75 Direct labor $ 32 Variable manufacturing overhead $ 12 Variable selling and administrative expense $ 11 Fixed costs: Fixed manufacturing overhead $ 19,700 Fixed selling and administrative expense $ 30,360 What is the total period cost for the month under variable costing?

Answer 1

Answer:

Total period cost for the month $65,240

Explanation:

Product cost under variable costing = Direct materials + Direct labor + Variable overheads

Period cost under variable costing = Fixed manufacturing overheads + All non manufacturing overheads (Variable and fixed)

Calculation of the total period cost using variable costing

Variable selling and administrative expense ($11 × 1,380 units)

$15,180

Fixed manufacturing overhead

$19,700

Fixed selling and administrative expense

$30,360

Total period cost for the month

$65,240