DeAnne Company's Variable Costing Income Statement for August Appears Below

question 98

Multiple Choice

DeAnne Company's variable costing income statement for August appears below:

DeAnne Company
Income Statement
For the month ended August 31
$\begin{array}{|l|l|l|}\hline \text { Sales }(\$ 15 \text { per unit) } & & \$ 600,000 \\\hline \text { Less: Variable costs } & & \\\hline \text { Variable cost of goods } & & \\\text { sold: } & &\\\text { Beginning inventory } & \$ 72,000 \\\hline \begin{array}{l}\text { Add: Variable cost of goods } \\\text { manufactured }\end{array} & \underline{315,000} \\\hline \text { Goods available for sale } & \$ 387,000 \\\hline \text { Less: Ending inventory } & \underline{27,000} \\\hline \text { Variable cost of goods sold } & \$ 360,000 \\\hline \text { Variable selling expense } & \underline{80,000} \\\hline\text { Total variable costs } & & \underline{\$ 440,000} \\\hline \text { Contribution margin } & & 160,000 \\\hline \text { Fixed costs: } & & \\\hline \text { Fixed manufacturing } & \$ 105,000 &\\ \text { overhead }\\\hline \begin{array}{l}\text { Fixed selling and } \\\text { administrative }\end{array} & \underline{35,000} & \\\hline \text { Total fixed costs } & & \$ 140,000 \\\hline \text { Operating income } & & \$ 20,000\\\hline\end{array}$ The company produces 35,000 units each month. Variable production costs per unit and total fixed costs have remained constant over the past several months.

-Under the absorption costing method,what was the dollar value of the company's inventory on August 31?

• A) $27,000.
• B) $36,000.
• C) $42,000.
• D) $47,000.

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