Question

A company had the following unit costs when 9,000 units were produced: Direct labor at $7.25 per unit; Direct material at $8.00 per unit; Variable overhead at $5.50 per unit; Fixed overhead at ($67,500/9,000 units) $7.50 per unit; and a Total production cost of $28.25 per unit. Under Absorption Costing, what is the total production cost per unit if 25,000 units had been produced?A. $28.25B. $23.45C. $26.25D. $20.75E. $15.25

Answer 1

Answer: Total production cost per unit = $8 +$7.25 + $5.50 = $20.75

Step-by-step explanation:

Given :

Direct labor at $7.25 per unit;

Direct material at $8.00 per unit;

Variable overhead at $5.50 per unit;

Fixed overhead at ($67,500/9,000 units) $7.50 per unit;

Total production cost of $28.25 per unit.

Now,

Under Absorption Costing, the total production cost per unit is calculated as

Total production cost per unit = Direct Materials +Direct Labor + Variable Overhead

Total production cost per unit = $8 +$7.25 + $5.50 = $20.75