Refer to the information in Exercise 6-1. Assume instead that Trio Company uses variable costing.
In Exercise 6-1
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 units
1. Compute the cost per unit using variable costing.
2. Determine the cost of ending finished goods inventory using variable costing.
3. Determine the cost of goods sold using variable costing.