Only variable manufacturing costs are inventoried when variable costing is used, so the inventory value of the new product is equal to the variable manufacturing costs incurred to produce it, which are $5,000,000.
Only variable manufacturing costs are inventoried when variable costing is used. This answer results from including fixed manufacturing costs of $2,000,000 and variable marketing costs of $1,000,000, as well. When variable costing is used, fixed manufacturing costs and marketing costs are period costs that are expensed as they are incurred.
Only variable manufacturing costs are inventoried when variable costing is used. This answer results from including fixed manufacturing costs of $2,000,000, variable marketing costs of $1,000,000, and fixed marketing costs of $3,000,000 as well. When variable costing is used, fixed manufacturing costs and marketing costs are period costs that are expensed as they are incurred.
Only variable manufacturing costs are inventoried when variable costing is used. This answer results from including variable marketing costs, as well. Marketing costs are always period costs that are expensed as they are incurred, regardless of whether variable costing or absorption costing is being used.
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