Question

Gabuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations

Selling price $ 106
Units in beginning inventory 0
Units produced 2,600
Units sold 2,200
Units in ending inventory 400
Variable costs per unit:
Direct materials $46
Direct labor $28
Variable manufacturing overhead $2
Variable selling and administrative expense $7
Fixed costs:
Fixed manufacturing overhead $33,800
Fixed selling and administrative expense $8,800

What is the total period cost for the month under variable costing?

a) $42,600

b) $33,800

c) $24,200

d) $58,000

Answer 1

Answer:

c) $ 24,200

Explanation:

Computation of Total Period costs

Fixed selling and Administrative expenses                       $  8,800

Variable Selling and Administrative costs

$ 7 per unit * 2,200 units sold                                            $ 15,400

Total period costs                                                                $ 24,200    

The fixed manufacturing overhead is part of manufacturing costs so not considered.

The variable selling and administrative costs are based on units sold and not units produced.