Figure 7-2
Steele Ltd Production Costs Per Unit (Based on 10,000 Units) Are as February

question 8

Multiple Choice

Figure 7-2
Steele Ltd. has the following information for January, February, and March 2011: $\begin{array}{lccc} & \text { January } & \text { February } & \text { March } \\\text { Units produced } & 10,000 & 10,000 & 10,000 \\\text { Units sold } & 7,000 & 8,500 & 10,500\end{array}$ Production costs per unit (based on 10,000 units) are as follows: $\begin{array}{lr}\text { Direct materials } & £ 12 \\\text { Direct labour } & 8 \\\text { Variable factory overhead } & 6 \\\text { Fixed factory overhead } & 4 \\\text { Variable selling and admin. expenses } & 10 \\\text { Fixed selling and admin. expenses } & 4\end{array}$ There were no beginning inventories for January 2011, and all units were sold for £50. Costs are stable over the three months.
-Refer to Figure 7-2. What is the January ending inventory for Steele Ltd. using the variable costing method?

• A)£260,000
• B)£78,000
• C)£108,000
• D)£90,000

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Definitions:

Unearned Rent Revenue

Income received by a property owner for rent that has not yet been earned because the time period the rent covers has not yet passed.

Credit

An accounting entry that increases a liability or equity account or decreases an asset or expense account.

Unearned Rent

Income received by an entity for rent that has not yet been earned, typically because the period of tenancy has not yet occurred.