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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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