Under absorption costing, a company had the following unit costs when 8,000 units were produced.
$$\begin{array} { l l }
\text { Direct labor } & \$ 8.50 \text { per unit } \
\text { Direct material } & \$ 9.00 \text { per unit } \
\text { Variable overhead } & \$ 6.75 \text { per unit } \
\text { Fixed overhead } ( \$ 60,000 / 8,000 \text { units } ) & \$ 7.50 \text { per unit } \
\quad \text { Total production cost } &\$ 31.75 \text { per }\text { unit }
\end{array}$$
Compute the total production cost per unit under variable costing if 20,000 units had been produced.

Question

Under absorption costing, a company had the following unit costs when 8,000 units were produced. 
$$\begin{array} { l l } 
\text { Direct labor } & \$ 8.50 \text { per unit } \
\text { Direct material } & \$ 9.00 \text { per unit } \
\text { Variable overhead } & \$ 6.75 \text { per unit } \
\text { Fixed overhead } ( \$ 60,000 / 8,000 \text { units } ) & \$ 7.50 \text { per unit } \
\quad \text { Total production cost } &\$ 31.75 \text { per }\text { unit } 
\end{array}$$
Compute the total production cost per unit under variable costing if 20,000 units had been produced.

Quizplus · Accepted Answer

The Answer of Under absorption costing, a company had the following unit costs when 8,000 units were produced. 
$$\begin{array} { l l } 
\text { Direct labor } & \$ 8.50 \text { per unit } \
\text { Direct material } & \$ 9.00 \text { per unit } \
\text { Variable overhead } & \$ 6.75 \text { per unit } \
\text { Fixed overhead } ( \$ 60,000 / 8,000 \text { units } ) & \$ 7.50 \text { per unit } \
\quad \text { Total production cost } &\$ 31.75 \text { per }\text { unit } 
\end{array}$$
Compute the total production cost per unit under variable costing if 20,000 units had been produced.

Under Absorption Costing, a Company Had the Following Unit Costs