   Chapter 3, Problem 53E ### Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

#### Solutions

Chapter
Section ### Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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# Inventory Valuation under Variable CostingLane Company produced 50,000 units during its first year of operations and sold 47,300 at $12 per unit. The company chose practical activity—at 50,000 units—to compute its predetermined overhead rate. Manufacturing costs are as follows: Required: 1. Calculate the cost of one unit of product under variable costing. 2. Calculate the cost of ending inventory under variable costing. 1. To determine Compute the value of cost of per unit of product with the help of variable costing. Explanation Variable Cost: Variable cost is the cost which varies due to the changes in the level of output to produce products and services in a relevant range. Calculation of cost per unit with the help of variable costing:  Particulars Amount ($) (A)Direct material cost per unit1 2.46 (B)Direct labor cost per unit1 1.86 (C)Variable overhead per unit1 1.30 Total cost per unit (A+B+C) 5.62

Table (1)

Therefore, total cost per unit of product is \$5.62.

Working Note:

1

2.

To determine

Compute the cost of ending inventory with the help of variable costing.

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