To calculate the total product cost per unit using absorption costing, add up the direct materials, direct labor, variable overhead, and fixed overhead costs per unit. For 2,400 units, the total product cost per unit is $98.17. The total product cost per unit remains the same for 3,000 units and 5,000 units as well.
To calculate the total product cost per unit using absorption costing, we need to add up the direct materials, direct labor, variable overhead, and fixed overhead costs per unit.
Using the given information:
- Direct materials cost per unit: $30
- Direct labor cost per unit: $20
- Variable overhead cost per unit: $11
- Fixed overhead cost per year: $60,000
- Variable selling and administrative expenses per unit: $3
- Fixed selling and administrative expenses per year: $22,000
a) For 2,400 units:
Total variable costs per unit
= Direct materials cost per unit + Direct labor cost per unit + Variable overhead cost per unit + Variable selling and administrative expenses per unit
= $30 + $20 + $11 + $3
= $64
Total fixed costs per unit
= Fixed overhead cost per year + Fixed selling and administrative expenses per year / Number of units
= $60,000 + $22,000 / 2,400
= $34.17
Total product cost per unit
= Total variable costs per unit + Total fixed costs per unit
= $64 + $34.17
= $98.17
b) For 3,000 units:
Total variable costs per unit = $64
Total fixed costs per unit = $34.17
Total product cost per unit = $98.17
c) For 5,000 units:
Total variable costs per unit = $64
Total fixed costs per unit = $34.17
Total product cost per unit = $98.17
Complete Question
Barnes Company reports the following for its product for its first year of operations.
Direct materials $30 per unit
Direct Labor $ 20 per unit
Variable Overhead $ 11 per unit
Fixed Overhead $60,000 per year
Variable selling and administrative expenses $3 per unit
Fixed Selling and Administrative Expenses $ 22,000 per year
Compute total product cost per unit using absorption costing for the following production levels
a) 2,400 Units
b) 3,000 Units
c) 5,000 Units