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The question is : B Co makes a product which has a variable production cost at $21 per unit and a sales price of $39 per unit. At the beginning of 20X5, there was no op.inventory and sales during the year were 50,000 units. Fixed costs (production, administration, sales and distribution) totalled $328,000. Production was 70,000.
The value of closing inventory is $ ?
solution:
closing inventory(70000-50000)=20000
value=20000*21(as 21 is the MC and closing inventory valued by the MC)=420000.
is my answer right or wrong? do correct me.thank you sir.
In future, if you want me to answer then you must ask in the Ask the Tutor forum. This forum is for students to help each other.
Provided the question does say to use marginal costing, then yes – your answer is correct.
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