Question

Vijay Company reports the following information regarding its production costs.

Direct materials $ 9.60 per unit
Direct labor $ 19.60 per unit
Overhead costs for the year
Variable overhead $ 9.60 per unit
Fixed overhead $ 121,600
Units produced 16,000 units
Compute its product cost per unit under absorption costing.

Answer 1

$46.40 per unit

Step-by-step explanation:

The computation of the product cost per unit under absorption costing is shown below:

= Direct material per unit + Direct labor per unit + Variable overhead cost per unit + fixed overhead cost per unit

where,

Fixed overhead cost per unit would be

= Fixed overhead ÷ units produced

= $121,600 ÷ 16,000 units

= $7.60

All other items will remain unchanged

Now add these values in the formula above.

Hence, the value would be

= $9.60 + $19.60 + $9.60 + $7.60

= $46.40 per unit.