Given the following data, total product cost per unit under variable costing is $7.05.
$\begin{array}{|l|c|}
\hline \text { Direct labor } & \$ 3.50 \text { per unit } \
\hline \text { Direct materials } & \$ 1.25 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 41,400 \
\hline \text { Total fixed overhead } & \$ 150,000 \
\hline & \
\hline \text { Expected units to be produced } & 18,000 \text { units } \
\hline
\end{array}$

Question

Given the following data, total product cost per unit under variable costing is $7.05.
 $\begin{array}{|l|c|}
\hline \text { Direct labor } & \$ 3.50 \text { per unit } \
\hline \text { Direct materials } & \$ 1.25 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 41,400 \
\hline \text { Total fixed overhead } & \$ 150,000 \
\hline & \
\hline \text { Expected units to be produced } & 18,000 \text { units } \
\hline
\end{array}$

Quizplus · Accepted Answer

Under variable costing, only variable costs (direct materials, direct labor, and variable overhead) are considered in determining product cost per unit. 
Total variable cost per unit = Direct labor cost per unit + Direct material cost per unit + Total variable overhead cost per unit 
= $3.50 + $1.25 + ($41,400/18,000) 
= $7.05

Given the Following Data, Total Product Cost Per Unit Under