Given the following data,total product cost per unit under variable costing is $10.75.
$\begin{array}{|l|c|}
\hline \text { Direct labor } & \$ 7 \text { per unit } \
\hline \text { Direct materials } & \$ 1 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 20,000 \
\hline \text { Total fixed overhead } & \$ 90,000 \
\hline & \
\hline \text { Expected units to be produced } & 40,000 \text { units } \
\hline
\end{array}$

Question

Given the following data,total product cost per unit under variable costing is $10.75.
 $\begin{array}{|l|c|}
\hline \text { Direct labor } & \$ 7 \text { per unit } \
\hline \text { Direct materials } & \$ 1 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 20,000 \
\hline \text { Total fixed overhead } & \$ 90,000 \
\hline & \
\hline \text { Expected units to be produced } & 40,000 \text { units } \
\hline
\end{array}$

Quizplus · Accepted Answer

Under variable costing, only variable costs are included in the product cost per unit. The direct labor and direct materials costs per unit are $7 and $1, respectively. The total variable overhead of $20,000 for 40,000 units results in a variable overhead cost of $0.50 per unit. Therefore, the total product cost per unit is $7 + $1 + $0.50 = $8.50, not $10.75.

Given the Following Data,total Product Cost Per Unit Under Variable