Lorillard Corporation has the following information for April, May, and June 2018: April May June Units produced
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Question:
Lorillard Corporation has the following information for April, May, and June 2018:
April | May | June | |
Units produced | 12,500 | 12,500 | 12,500 |
Units sold | 8,750 | 10,625 | 13,125 |
Production costs per unit (based on 12,500 units) are as follows: | |||
Direct materials | $ 15 | ||
Direct labor | 10 | ||
Variable factory overhead | 7.50 | ||
Fixed factory overhead | 5 | ||
Variable selling and admin. expenses | 12.50 | ||
Fixed selling and admin. expenses | 5 |
There were no beginning inventories for April 2018, and all units were sold for $50. Costs are stable over the three months.
What is the June ending inventory cost for Lorillard Corporation using the variable costing method?
a.$75,000
b.$125,000
c.$162,500
d.$187,500
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