Hardee Inc. , which produces a single product, has provided the following data for its most recent month of operations: There were no beginning or ending inventories. The unit product cost under variable costing was:
A)$35 per unit
B)$32 per unit
C)$103 per unit
D)$33 per unit

Question

Hardee Inc. , which produces a single product, has provided the following data for its most recent month of operations:  There were no beginning or ending inventories. The unit product cost under variable costing was:
A)$35 per unit 
B)$32 per unit 
C)$103 per unit 
D)$33 per unit

Quizplus · Accepted Answer

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

Direct materials per unit = $60/4,800 units = $0.0125 per unit
Direct labor per unit = $48/4,800 units = $0.01 per unit
Variable manufacturing overhead per unit = $120/4,800 units = $0.025 per unit
Variable selling and administrative expenses per unit = $20/4,800 units = $0.00417 per unit

Total variable cost per unit = $0.0125 + $0.01 + $0.025 + $0.00417 = $0.05167 per unit

Therefore, the unit product cost under variable costing is equal to the total variable cost per unit, which is rounded to $33 per unit (since the options are given in whole numbers). Therefore, the correct answer is D.