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

question 133

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 April ending inventory for Lorillard Corporation using the variable costing method?

• A)$312,500
• B)$187,500
• C)$121,875
• D)$140,000

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Definitions:

Credit Memorandum

A document issued by a seller to acknowledge a reduction in the amount that a buyer owes, often due to a return or refund.

Cash Account

An account reflecting the amount of cash available, including all receipts and payments of cash.

Bank Statement

A report sent by a bank to a customer indicating the previous balance, ATM transactions, nonsufficient funds, individual checks processed, individual deposits received, service charges, and ending bank balance.

Outstanding Checks

Checks written by a company or person that were not received or not processed by the bank before the preparation of the bank statement.