Brislin Gifts Makes Ceramic Mugs and Has the Following Amounts

Multiple Choice

Brislin Gifts makes ceramic mugs and has the following amounts during 2014 (Assume the same unit costs in all years) : $$\begin{array} { l r } \text { Selling price } & \$ 9.00 \text { per mug } \\\text { Variable production cost } & \$ 2.50 \text { per mug } \\\text { Variable selling cost } & \$ 1.10 \text { per mug } \\\text { Fixed production cost } & \$ 100,000 \text { per year } \\\text { Fixed selling and administrative cost } & \$ 60,000 \text { per year }\end{array}$$ Production and sales in units for the first three months of 2014 are as follows: $\begin{array}{lll}\text { Year }&\text {Production }&\text {Sales }\\\text { January } & 50,000 & 44,000 \\\text { February } & 40,000 & 45,000 \\\text { March } & 50,000 & 45,000\end{array}$
Inventory at January 1, 2014 consisted of 1,000 mugs. How much is the inventory cost per unit under full costing during March?

A) $4.50
B) $4.00
C) $2.50
D) $5.10