McFadden,Inc What Is the Ending Balance in Finished Goods Inventory Using

question 34

Multiple Choice

McFadden,Inc.has collected the following data.(There are no beginning inventories.) $$\begin{array} { | l | r | } \hline \text { Units produced } & { 700 \text { units } } \\\hline \text { Sales price } & \$ 120 \text { per unit } \\\hline \text { Direct materials } & \$ 20 \text { per unit } \\\hline \text { Direct labor } & \$ 12 \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 5 \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 16,000 \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 6 \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 12,300 \text { per year } \\\hline\end{array}$$ What is the ending balance in Finished Goods Inventory using variable costing if 500 units are sold?

• A) $6,400
• B) $7,400
• C) $3,400
• D) $4,000

Understand the difference between variable and fixed manufacturing overhead costs and their implications on overhead rates.

Calculate and understand the significance of plantwide predetermined overhead rates.

Apply overhead costs to jobs based on predetermined overhead rates.

Evaluate the efficiency of using labor-hours vs. machine-hours as allocation bases for overhead rates.

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