Question

Wu Equipment Company manufactures and distributes industrial air compressors. The following data are available for the year ended December 31, 2020. The company had no beginning inventory. In 2020, it produced 1,460 units but sold only 1,200 units. The unit selling price was 4,470.Costsandexpenseswereasfollows:VariablecostsperunitDirectmaterialsDirectlabourVariablemanufacturingoverheadVariablesellingandadministrativeexpenses790 1,500 200 65

Annual fixed costs and expenses
Fixed manufacturing overhead Selling and administrative expenses
$1,197,500 103,900V (a) Calculate the manufacturing cost of one unit of product using variable costing.
Manufacturing cost per unit

Answer 1

The manufacturing cost per unit using variable costing for Wu Equipment Company is $2,490, calculated by summing the variable costs of direct materials ($790), direct labor ($1,500), and variable manufacturing overhead ($200).

Step-by-step explanation:

To calculate the manufacturing cost per unit using variable costing, we only consider the variable costs associated with the production of the units. Here, we need to add together the variable costs per unit for the direct materials, direct labor, and variable manufacturing overhead.

Direct materials cost $790, direct labor costs $1,500, and variable manufacturing overhead is $200 per unit. The sum of these costs will give us the total variable manufacturing cost per unit.

So, the manufacturing cost per unit is calculated as follows:

• Direct materials: $790
• Direct labor: $1,500
• Variable manufacturing overhead: $200

The total variable costs for one unit = $790 + $1,500 + $200 = $2,490.

This is the manufacturing cost per unit using variable costing for Wu Equipment Company for the year ended December 31, 2020.