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Variable Costing, Value of Ending Inventory, Operating Income

Pattison Products, Inc., began operations in October and manufactured $44,000$ units during the month with the following unit costs:

Direct materials $$4\mathrm{.}50$

Direct labor $2\mathrm{.}50$

Variable overhead $1\mathrm{.}25$

Fixed overhead$*6\mathrm{.}50$

Variable marketing cost $0\mathrm{.}95$

$*$ Fixed overhead per unit $=$ $$286,000/44,000$ units produced $=$ $$6\mathrm{.}50$

Total fixed factory overhead is $$286,000$ per month. During October, $42,800$ units were sold at a price of $$24\mathrm{.}25,$ and fixed marketing and administrative expenses were $$111,800.$

Required:

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$1.$ Calculate the cost of each unit using variable costing. Round your final answer to the nearest cent.

$fill in the blank $05$fd$82$f$3400000$d$\_1$

per unit

$2.$ How many units remain in ending inventory?

fill in the blank $05$fd$82$f$3400000$d$\_2$

units

What is the cost of ending inventory using variable costing?

$fill in the blank $05$fd$82$f$3400000$d$\_3$

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$1.$ Variable costing assigns only unit$-$level variable manufacturing costs to the cost of the product.

$2.$ How does the beginning inventory balance factor into the calculation of ending inventory? What about units produced versus units sold? What role do those amounts play?

How does the cost per unit factor into the calculation of the cost of ending inventory?

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$3.$ Prepare a variable$-$costing income statement for Pattison Products, Inc., for the month of October.

Pattison Products, Inc.

Variable$-$Costing Income Statement

For the Month of October

$$-$ Select $-$

$1,197,500$

Less:

$-$ Select $-$

$-$ Select $-$

Contribution margin $fill in the blank a$0270$bf$3901$f$057\_7$

Less:

$-$ Select $-$

$-$ Select $-$

Operating income $fill in the blank a$0270$bf$3901$f$057\_12$

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