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Benton Manufacturing produces snow shovels. The selling price per snow shovel is $31.00. There is no beginning inventory.
Costs involved in production are:
Direct material $4.00
Direct labor 4.00
Variable manufacturing overhead 3.00
Total variable manufacturing costs per unit $11.00
Fixed manufacturing overhead per year $180,200
In addition, the company has fixed selling and administrative costs of $162,600 per year. During the year, Benton produces 53,000 snow shovels and sells 48,270 snow shovels.
Problem 1: What is the value of ending inventory using variable costing?
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