B is corrent. The requirement is to calculate the finished goods inventory cost under the variable (direct) costing method. Under variable costing, inventory cost would consist of only the variable production costs, including direct materials, direct labor, and variable overhead. The variable production costs for the period are equal to $144,000 ($80,000 + $40,000 + $24,000), and the variable cost per unit would be equal to $7.20 ($144,000/20,000 units produced). Since there were no beginning or ending inventories of work in process, the cost of the ending inventory is equal to $14,400, which is equal to the 2,000 (20,000 – 18,000) unsold units multiplied by the cost per unit.
A is incorrect. Finished goods inventory under variable costing would equal $14,400.
C is incorrect. Finished goods inventory under variable costing would equal $14,400.
D is incorrect. Finished goods inventory under variable costing would equal $14,400.
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