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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