Question

Vijay Company reports the following information regarding its production costs. Direct materials $ 10 per unit Direct labor $ 20 per unit Overhead costs for the year Variable overhead $ 10 per unit Fixed overhead $ 160,000 Units produced 20,000 unitsCompute the production cost per unit under variable costing.

Answer 1

$40 production cost under variable costing.

Step-by-step explanation:

In order to solve this you just have to know the options and the properties that Variable Costing includes:

Variable costing includes:

Direct materials.

Direct labor.

Variable overhead.

So this costs are the ones that need to be added in order to calculate the production cost under variable costing:

Variable overhead: $10

Direct Materials: $10

Direct labor: $20

Total production cost: $40

So the production cost under variable costing: $40

Answer 2

Unitary variable cost= $40

Total variable cost= $800,000

Step-by-step explanation:

Giving the following information:

Direct materials $ 10 per unit

Direct labor $ 20 per unit

Overhead costs for the year Variable overhead $ 10 per unit

Fixed overhead $ 160,000

Units produced 20,000 units

Unitary variable cost= direct material + direct labor + manufacturing overhead= 10 + 20 + 10= $40

Total variable cost= 20000units* 40= $800,000