Question

Mentor Corp. has provided the following information for the current year: Units produced 3,500 units Sale price $ 200 per unit Direct materials $ 70 per unit Direct labor $ 55 per unit Variable manufacturing overhead $ 20 per unit Fixed manufacturing overhead $ 350,000 per year Variable selling and administrative costs $ 30 per unit Fixed selling and administrative costs $ 150,000 per year Calculate the unit product cost using variable costing. Multiple Choice

$245
$275
$55
$145

Answer 1

Answer:

$ 145

Explanation:

Units produced 3,500 units

Sale price $ 200 per unit

Direct materials $ 70 per unit

Direct labor $ 55 per unit

Variable manufacturing overhead $ 20 per unit

Variable Costs = $ 145

Variable selling and administrative costs $ 30 per unit

Total Variable Cost = $ 175* 3500= $ 612500

Fixed manufacturing overhead $ 350,000 per year

Fixed selling and administrative costs $ 150,000 per year

Total Costs             $1112500

Total Unit Cost = $112500/3500= $ 317.85