The following information is available for X Co. for its first year of operations:

Sales in units 5,000

Production in units 8,000

Manufacturing costs:

Direct labor $3 per unit

Direct material 5 per unit

Variable overhead 1 per unit

Fixed overhead $100,000

Net income (absorption method) $30,000

Sales price per unit $40

17. What would X Co. have reported as its income before income taxes if it had used variable costing?

A. $30,000 B. ($7,500) C. $67,500 D. ($30,000)

18. What was the total amount of SG&A expense incurred by X Co.?

A. $30,000 B. $62,500 C. $6,000 D. $36,000

19. Based on variable costing, what would X Co. show as the value of its ending inventory?

A. $120,000 B. $64,500 C. $27,000 D. $24,000