During January, Long, Inc. produced 10,000 units of product with costs as follows: What is Lang's unit cost for January, calculated on the variable costing basis?

Question

During January, Long, Inc. produced 10,000 units of product with costs as follows:  What is Lang's unit cost for January, calculated on the variable costing basis?

Quizplus · Accepted Answer

To calculate the unit cost on the variable costing basis, we only consider the variable costs, which are $5 for direct materials, $2 for direct labor, and $1 for variable overhead, totaling $8 per unit. Therefore, the unit cost for January is: 
Total variable costs ÷ Number of units produced 
$80,000 ÷ 10,000 units = $8 per unit. 
So, the correct answer is B.