Sunland Company sells its product for $90 per unit. During 2019, it produced 60000 units and sold 50000 units (there was no beginning inventory). Costs per unit are: direct materials $25, direct labor $12, and variable overhead $1. Fixed costs are: $720000 manufacturing overhead, and $90000 selling and administrative expenses. Ending inventory under variable costing is

Question

Sariah Giles

Business

14 December, 00:10

Sunland Company sells its product for $90 per unit. During 2019, it produced 60000 units and sold 50000 units (there was no beginning inventory). Costs per unit are: direct materials $25, direct labor $12, and variable overhead $1. Fixed costs are: $720000 manufacturing overhead, and $90000 selling and administrative expenses. Ending inventory under variable costing is

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Brody Bradshaw · Answer 1

Ending inventory value = $380,000

Explanation:

Giving the following information:

Costs per unit are: direct materials $25, direct labor $12, and variable overhead $1.

Ending inventory in units = 10,000

Under the variable costing method, the unit product cost is calculated using direct material, direct labor, and variable overhead.

Unit product cost = 25 + 12 + 1 = $38

Ending inventory value = 38*10,000 = $380,000