Question

A manufacturer reports the following costs to produce 10,000 units in its first year of operations: Direct materials, $10 per unit, Direct labor, $6 per unit, Variable overhead, $70,000, and Fixed overhead, $120,000. The total product cost per unit under variable costing is:

Answer 1

Answer:

Unitary cost= $23

Explanation:

Giving the following information:

Direct materials= $10 per unit

Direct labor= $6 per unit

Variable overhead= $70,000

Units produced= 10,000

Under the variable costing method, the unitary production cost is calculated using direct material, direct labor, and unitary variable overhead.

First, we need to calculate the unitary variable overhead:

Unitary variable overhead= 70,000/10,000= $7

Now, we can calculate the total unitary cost:

Unitary cost= direct material + direct labor + unitary variable overhead

Unitary cost= 10 + 6 + 7= $23