Question

Trio Company reports the following information for the current year, which is its first year of operations. Direct materials - $ 15 per unit Direct labor - $ 16 per unit Overhead costs for the year Variable overhead - $ 80,000 per year Fixed overhead - $ 160,000 per year Units produced this year - 20,000 units Units sold this year - 14,000 units Ending finished goods inventory in units - 6,000 unitsCompute the cost per unit using variable costing.
Determine the cost of ending finished goods inventory using variable costing.
Determine the cost of goods sold using variable costing.

Answer 1

Answer:

Finished Goods Inventory = $210,000

Cost of Goods Sold =  $490,000

Explanation:

Unit Cost of Goods Manufactured - Variable Costing

Direct materials                                               $ 15.00

Direct labor                                                      $ 16.00

Overhead costs :

Variable overhead - ($ 80,000/20,000)        $ 4.00

Total                                                                 $ 35.00

Finished Goods Inventory = 6,000 × $ 35.00

                                            = $210,000

Cost of Goods Sold

Cost of Goods Sold = Opening Stock of Finished Inventory + Cost of Goods Manufactured - Closing Stock of Finished Inventory

Cost of Goods Sold Calculation

Opening Stock of Finished Inventory                                         0

Add Cost of Goods Manufactured (20,000× $ 35.00)      $700,000

Available for Sale                                                                 $700,000

Less Closing Stock of Finished Inventory                          ($210,000)

Cost of Goods Sold                                                              $490,000