Last year,Adara Company produced 7000 units and sold 5000 units.The company had no beginning inventory.They incurred the following costs: $$\begin{array} { | l | l | }
\hline \text { Direct materials per unit } & \$ 15 \
\hline \text { Direct labor per unit } & \$ 6 \
\hline \text { Variable overhead per unit } & \$ 3 \
\hline \text { Total fixed manufacturing } & \
\text { pverhead } & \$ 28,000 \
\hline \text { Total selling and administrative } & \$ 75,000 \
\hline
\end{array}$$ Adara's product cost per unit under variable costing is

Question

Last year,Adara Company produced 7000 units and sold 5000 units.The company had no beginning inventory.They incurred the following costs: $$\begin{array} { | l | l | } 
\hline \text { Direct materials per unit } & \$ 15 \
\hline \text { Direct labor per unit } & \$ 6 \
\hline \text { Variable overhead per unit } & \$ 3 \
\hline \text { Total fixed manufacturing } & \
\text { pverhead } & \$ 28,000 \
\hline \text { Total selling and administrative } & \$ 75,000 \
\hline
\end{array}$$ Adara's product cost per unit under variable costing is

Quizplus · Accepted Answer

Variable costing includes only the variable costs directly associated with the production of goods. For Adara Company, this includes direct materials ($15), direct labor ($6), and variable overhead ($3) per unit. Adding these together gives a product cost per unit of $24 under variable costing.

Last Year,Adara Company Produced 7000 Units and Sold 5000 Units