Reference no: EM132607839

Crystal Company's variable costing income statement for the month of May appears below:

Crystal Company

Income Statement

For the month ended May 31

Sales ($10 per unit)   $900,000

Less:

Variable costs

Variable cost of goods sold:

Beginning inventory                               $125,000

Add:

Variable cost of goods manufactured        400,000

Goods available for sale                           $525,000

Less:

Ending inventory                                       75,000

Variable cost of goods sold                          $450,000

Variable selling expense                                 90,000

Total variable costs                                      $540,000

Contribution margin                                           360,000

Fixed costs:

Fixed manufacturing overhead                                $240,000

Fixed selling and administrative                                  90,000

Total fixed costs                                                      $330,000

Operating income                                                       $30,000

• The company produces 80,000 units each month. Variable production costs per unit and total fixed costs have remained constant over the past several months.

Problem 1: What was the dollar value of the company's inventory on May 31 under the absorption costing method?

A) $90,000.

B) $60,000.

C) $75,000.

D) $120,000.