Steele Ltd $\text { Froduction costs per unit (based on } 10,000 \text { units) are as follows: }$

Multiple Choice

Steele Ltd. has the following information for January, February, and March 2011: $\begin{array}{lccc} & \text { January } & \text { February } & \text { March } \\\text { Units produced } & 10,000 & 10,000 & 10,000 \\\text { Units sold } & 7,000 & 8,500 & 10,500\end{array}$

$\text { Froduction costs per unit (based on } 10,000 \text { units) are as follows: }$

$\begin{array}{lr}\text { Direct materials } & £ 12 \\\text { Direct labour } & 8 \\\text { Variable factory overhead } & 6 \\\text { Fixed factory overhead } & 4 \\\text { Variable selling and admin. expenses } & 10 \\\text { Fixed selling and admin. expenses } & 4\end{array}$ There were no beginning inventories for January 2011, and all units were sold for £50. Costs are stable over the three months. What is the February ending inventory for Steele Ltd. using the absorption costing method?

A) £39,000
B) £45,000
C) £135,000
D) £300,000