Tat Corporation produces a single product and has the following cost structure: The unit product cost under variable costing is:
A) $169 per unit
B) $171 per unit
C) $247 per unit
D) $174 per unit

Question

Tat Corporation produces a single product and has the following cost structure:  The unit product cost under variable costing is:
A) $169 per unit 
B) $171 per unit 
C) $247 per unit 
D) $174 per unit

Quizplus · Accepted Answer

The unit product cost under variable costing is calculated as follows:

Variable Cost per unit = Direct Materials + Direct Labor + Variable Manufacturing Overhead 
= $44 + $32 + $22 
= $98

Fixed Manufacturing Overhead per unit = Total Fixed Manufacturing Overhead / Total Units Produced 
= $600,000 / 30,000 
= $20

Therefore, Unit Product Cost under Variable Costing = Variable Cost per unit + Fixed Manufacturing Overhead per unit 
= $98 + $20 
= $118

However, since the question is asking for the unit product cost under variable costing, we need to add the variable selling and administrative expenses per unit as well, which is $53.

Therefore, Unit Product Cost under Variable Costing = Variable Cost per unit + Fixed Manufacturing Overhead per unit + Variable Selling and Administrative Expenses per unit 
= $98 + $20 + $53 
= $171

Hence, the correct answer is B.

Tat Corporation Produces a Single Product and Has the Following