Question
Carlton Specialties makes custom key rings and has the following amounts during 2021 (Assume the same unit costs in all years): Selling price $9.00 per
Carlton Specialties makes custom key rings and has the following amounts during 2021 (Assume the same unit costs in all years):
Selling price $9.00 per ring
Variable production cost $2.50 per ring
Variable selling cost $1.10 per ring
Fixed production cost $100,000 per year
Fixed selling and administrative cost $60,000 per year
Production and sales in units for the first three months of 2021 are as follows:
Year Production Sales
January 50,000 44,000
February 40,000 45,000
March 50,000 45,000
Inventory at January 1, 2021 consisted of 1,000 rings. How much is the inventory cost per unit under variable costing during March?
A) $ 2.50
B) $ 4.50
C) $ 5.60
D) $ 3.60
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