Question

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:
Selling price $ 121
Units in beginning inventory 0
Units produced 6,000
Units sold 5,600
Units in ending inventory 400

Variable costs per unit:
Direct materials $ 38
Direct labor $ 53
Variable manufacturing overhead $ 3
Variable selling and administrative expense $ 11

Fixed costs:
Fixed manufacturing overhead $ 60,000
Fixed selling and administrative expense $ 28,000

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

A) $149,600
B) $60,000
C) $88,000
D) $89,600

Answer 1

Answer:

C) $88,000

Explanation:

period cost: cost which cannot be capitalize through inventory or other assets.

Under variable cost, the fixed cost are treated as period cost.

Fixed costs:

Fixed manufacturing overhead $ 60,000

Fixed selling and administrative expense $ 28,000