Lorillard Corporation Has the Following Information for April, May, and June

question 95

Multiple Choice

Lorillard Corporation has the following information for April, May, and June 2016: Production costs per unit (based on 12,500 units) are as follows:
Direct materials $15
Direct labor 10
Variable factory overhead 7.50
Fixed factory overhead 5
Variable selling and admin. expenses 12.50
Fixed selling and admin. expenses 5
There were no beginning inventories for April 2016, and all units were sold for $50. Costs are stable over the three months.
What is the May ending inventory cost for Lorillard Corporation using the absorption costing method?

• A) $44,375.00
• B) $35,625.00
• C) $70,000.00
• D) $210,937.50

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Direction of the Relationship

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