Lorillard Corporation Has the Following Information for April, May, and June

question 4

Multiple Choice

Lorillard Corporation has the following information for April, May, and June 2018: $\begin{array} { l r r r } & \text { April } & \text { May } & \text { June } \\ \text { Units produced } & 12,500 & 12,500 & 12,500 \\ \text { Units sold } & 8,750 & 10,625 & 13,125 \end{array}$
Production costs per unit (based on 12,500 units) are as follows:
$\begin{array}{lr}\text { Direct materials } & \$ 15 \\\text { Direct labor } & 10 \\\text { Variable factory overhead } & 7.50 \\\text { Fixed factory overhead } & 5 \\\text { Variable selling and admin. expenses } & 12.50 \\\text { Fixed selling and admin. expenses } & 5\end{array}$ 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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