Chamiching makes hacksaw blades. Inventory values are determined using the first in, first out (FIFO) method. Production and sales data for the first three years appear below.

Hacksaw blades	Sold	Produced
Yr 1	18,000	22,000
Yr 2	25,000	23,000
Yr 3	37,000	35,000

	Sales price	Full cost
Yr 1	$10.00	$6.00
Yr 2	$11.00	$6.60
Yr 3	$12.00	$7.60

For Chamiching, which of the following is true?

In the first year, variable costs accounted for half of the full costs. Total fixed production costs increased each subsequent year by 20%, as a result of step-fixed costs and a general inflationary price increase.

		The variable cost of Yr 2 ending inventory is $6,887
		The full cost of Yr 2 ending inventory is double the variable cost ending inventory
		There are 3,000 hacksaw blades in ending inventory
		The fixed cost per unit in Yr 3 is $2.72
		None of the above

Answer rating: 100% (QA)

Solution Answer Explanation The fixed cost p... View the full answer