The accounting records for Eisner Manufacturing Company included the following cost information relating to its first year of operations: Assume the company produced 10,000 units of inventory and sold 6,000 of these units during the year for $192,000. The cost per unit under variable and absorption costing would be, respectively:
$$\begin{array} { | l | c r | }
\hline \text { Direct materials } & \$ & 60,000 \
\hline \text { Direct labor } & \$ & 80,000 \
\hline \text { Fixed manufacturing overhead } & \$ & 100,000 \
\hline \text { Variable manufacturing overhead } & \$ & 20,000 \
\hline
\end{array}$$

Question

The accounting records for Eisner Manufacturing Company included the following cost information relating to its first year of operations: Assume the company produced 10,000 units of inventory and sold 6,000 of these units during the year for $192,000. The cost per unit under variable and absorption costing would be, respectively:
$$\begin{array} { | l | c r | } 
\hline \text { Direct materials } & \$ & 60,000 \
\hline \text { Direct labor } & \$ & 80,000 \
\hline \text { Fixed manufacturing overhead } & \$ & 100,000 \
\hline \text { Variable manufacturing overhead } & \$ & 20,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

Under variable costing, the cost per unit includes direct materials, direct labor, and variable manufacturing overhead: ($60,000 + $80,000 + $20,000) / 10,000 units = $16.00. Under absorption costing, the cost per unit also includes fixed manufacturing overhead: ($60,000 + $80,000 + $20,000 + $100,000) / 10,000 units = $26.00.

The Accounting Records for Eisner Manufacturing Company Included the Following