A. In this answer it incorrectly assumes that selling costs are variable production costs, and fixed overhead are not included in calculation. However, selling costs are a period cost, not a production cost, and fixed overheads are a production cost.

B. This is the total variable costs of production.

C. First, we need to determine the number of units produced in during the period using the formula for the physical flow of goods: Beginning Inventory + Units Produced - Units Sold = Ending Inventory. 40,000 + Units Produced - 70,000 = 30,000.Units Produced = 60,000 We then multiply the unit variable production cost by the number of units produced and add the product to the fixed overhead cost, since fixed overhead is a production cost also. Period costs such as selling costs are not production costs and we do not take them into consideration when calculating the budgeted production costs.

Unit variable production costs are: $10 DM + $20 DL + $5 VOH = $35. Total variable production costs are: $35 × 60,000 = $2,100,000. Total production costs are: $2,100,000 + $80,000 = $2,180,000

D. In this answer it incorrectly assumes that selling costs are a variable production cost. However, selling costs are a period cost.