) A company manufactures a single product. Unit costs are:                      $/Unit Variable production cost             14.75 Fixed production                     8.30 Variable selling                       2.60 Fixed selling                         5.45   400,000 units of the product were manufactured in a period, during which 394,000 units were sold. There was no inventory of the product at the beginning of the period. Required: 1) Use Marginal costing to calculate the total value of the finished goods inventory at the end of the period. 2) Many firms have decided to use marginal costing to prepare the income statement. Please briefly explain the benefits of using marginal costing.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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  1. ) A company manufactures a single product.

Unit costs are:                      $/Unit

Variable production cost             14.75

Fixed production                     8.30

Variable selling                       2.60

Fixed selling                         5.45

 

400,000 units of the product were manufactured in a period, during which 394,000 units were sold. There was no inventory of the product at the beginning of the period.

Required:

1) Use Marginal costing to calculate the total value of the finished goods inventory at the end of the period.

2) Many firms have decided to use marginal costing to prepare the income statement. Please briefly explain the benefits of using marginal costing.

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