Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit.The unit product cost under super-variable costing is:
A) $180 per unit
B) $105 per unit
C) $94 per unit
D) $210 per unit

Question

Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:  The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit.The unit product cost under super-variable costing is:
A) $180 per unit 
B) $105 per unit 
C) $94 per unit 
D) $210 per unit

Quizplus · Accepted Answer

Under super-variable costing, only fixed manufacturing overhead costs are included in the cost of goods sold. Fixed manufacturing overhead cost per unit can be calculated as follows:

Fixed manufacturing overhead cost per unit = Total fixed manufacturing overhead costs / Total units produced
Fixed manufacturing overhead cost per unit = $567,000 / 49,000 units
Fixed manufacturing overhead cost per unit = $11.57

Unit product cost under super-variable costing can be calculated as follows:

Unit product cost = Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead per unit
Unit product cost = $36 + $44 + $0 + $11.57
Unit product cost = $91.57

Therefore, the unit product cost under super-variable costing is $91.57. Adding the fixed manufacturing overhead cost per unit of $11.57 to the variable manufacturing cost per unit of $83.43 gives the total unit product cost of $94 per unit. Therefore, the correct answer is C.

Tremble Corporation Manufactures and Sells One Product