Given the following data, total product cost per unit under absorption costing will be greater than total product cost per unit under variable costing.
$$\begin{array} { | l | c | }
\hline \text { Direct labor } & \$ 9 \text { per unit } \
\hline \text { Direct rmaterials } & \$ 7 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 45,000 \
\hline \text { Total fixed overhead } & \$ 27,000 \
\hline & \
\hline \text { Expected urits to be produced } & 9,000 \text { units } \
\hline
\end{array}$$

Question

Given the following data, total product cost per unit under absorption costing will be greater than total product cost per unit under variable costing.
 $$\begin{array} { | l | c | } 
\hline \text { Direct labor } & \$ 9 \text { per unit } \
\hline \text { Direct rmaterials } & \$ 7 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 45,000 \
\hline \text { Total fixed overhead } & \$ 27,000 \
\hline & \
\hline \text { Expected urits to be produced } & 9,000 \text { units } \
\hline
\end{array}$$

Quizplus · Accepted Answer

Under absorption costing, fixed overhead costs are included in the product cost per unit, whereas under variable costing, only variable costs are included. Since there is a significant amount of fixed overhead costs in this scenario, total product cost per unit under absorption costing will be higher than under variable costing.

Given the Following Data, Total Product Cost Per Unit Under