Unile Auto Produces and Sells an Auto Part for $60

question 167

Multiple Choice

Unile Auto produces and sells an auto part for $60.00 per unit. In 2015, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes:
$\begin{array}{ll}\text { Direct materials } & \$ 20.00 \text { per unit } \\\text { Direct manufacturing labor } & \$ 4.00 \text { per unit } \\\text { Variable manufacturing costs } & \$ 1.00 \text { per unit } \\\text { Sales commissions } & \$ 6.00 \text { per part } \\\text { Fixed manufacturing costs } & \$ 750,000 \text { per year } \\\text { Administrative expenses all fixed } & \$ 270,000 \text { per year }\end{array}$
-What is the inventoriable cost per unit using variable costing?

• A) $20.00
• B) $24.00
• C) $25.00
• D) $31.00

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Definitions:

Net Income

The residual earnings of a company following the subtraction of all costs and taxes from its revenue.

Costing Method

An accounting approach used to value inventory and determine the cost of goods sold, which can vary, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus the cost of goods sold.

Cost of Goods Sold

The direct costs tied to the production of the goods sold by a company, including materials and labor.