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

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.
 $$\begin{array} { | l | c | } 
\hline \text { Direct labor } & \$ 9 \text { per unit } \
\hline \text { Direct materials } & \$ 7 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 45,000 \
\hline \text { Total fixed overhead } & \$ 27,000 \
\hline & \
\hline \text { Expected units to be produced } & 9,000 \text { units } \
\hline
\end{array}$$

Quizplus · Accepted Answer

Under absorption costing, both variable and fixed overheads are included in the product cost per unit. In contrast, variable costing only includes variable overheads. Therefore, the total product cost per unit under absorption costing will be greater.

Given the Following Data, Total Product Cost Per Unit Under