During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $6 per unit, Direct labor, $4 per unit, Variable overhead, $5 per unit, and Fixed overhead, $234,000. The company produced 26,000 units, and sold 18,000 units, leaving 8,000 units in inventory at year-end. What is the value of ending inventory under variable costing?

$192,000

Explanation:

Calculation for What is the value of ending inventory under variable costing

Using this formula

Value of ending inventory =[(Direct materials+Direct labor+Variable overhead+(Fixed overhead/Units produced)×Ending units in inventory]

Let plug in the formula

Value of ending inventory=[($6+ $4+ $5 + ($234,000/26,000 units) ×8,000 units]

Value of ending inventory= ($15 units+$9 units)×8,000 units

Value of ending inventory=$24 per units×8,000 units

Value of ending inventory = $192,000

Therefore the value of ending inventory under variable costing will be $192,000

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

answer; buyer guide;