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

Variable costing includes only variable overhead costs in the total product cost per unit. In this case, the total variable overhead cost is $41,400 and the expected units to be produced are 18,000 units. Therefore, the variable overhead cost per unit is $41,400 / 18,000 units = $2.30. Adding this to the direct labor cost of $3.50 per unit and the direct materials cost of $1.25 per unit gives a total product cost per unit under variable costing of $3.50 + $1.25 + $2.30 = $7.05.

Given the Following Data, Total Product Cost Per Unit Under