Ch 6 Quiz Question 7 (of 10) Yankee Corporation manufactures a single product. T
ID: 2547394 • Letter: C
Question
Ch 6 Quiz Question 7 (of 10) Yankee Corporation manufactures a single product. The company has the following cost structure Variable costs per unit $4 $1 Selling and administrative.... Fixed costs in total: ...$12,000 Selling and administrativ $8,000 ast year,4,000 units were produced and 3,500 unts were sold. There were no beginning inventories The carrying value on the balance sheet of the ending finished goods inventory under variable costing would be O the same as under absorption costing O s1500 iess than under absorption costing O $2.000 higher than under absorption costing O $2000 less than under absorption costing Type here to search F10 5 6 WIER 8Explanation / Answer
The correct alternative is second(2) i.e. $1500 less than under absorption costing arrived as follows Inventory as per variable costing 2000 =500*4 Inventory as per absorption costing 3500 =500*4+(12000/4000)*500 Difference 1500 The reason for above is under variable costing Inventory is valued at variable production costs while under absorption costing is valued at variable and fixed production costs. The above calculation shows the same.