Brady, Inc. uses a normal absorption costing system in which the overhead rate and variable manufacturing costs have remained unchanged for the last 2 years. During the current year the following activity occurred: Denominator volume 25,000 units
Unit sales 20,000 units
Cost of goods sold $170,000
Volume variance $5,040 Unfavourable
Operating income after adjusting for
The volume variance $40,000
Budgeted fixed overhead $90,000
The firm had no beginning or ending work in process inventories. However, there were 1,000 units in beginning finished goods.
The variable product cost per unit was:
A)$4.90
B)$5.15
C)$4.00
D)$4.25

Question

Quizplus · Accepted Answer

Variable product cost per unit = (Cost of goods sold - Fixed overhead) / Unit sales= ($170,000 - $90,000) / 20,000 units= $80,000 / 20,000 units= $4.00 per unit