Question

Under absorption costing, a company had the following unit costs when 8,000 units were produced. Compute the total production cost per unit under variable costing if 20,000 units had been produced. Direct labor $8.50 per unit Direct material $9.00 per unit Variable overhead $6.75 per unit Fixed overhead ($60,000/8,000 units) $7.50 per unitCompute the total production cost per unit under variable costing if 20,000 units had been produced. a. $26.25 b. $27.25 c. $24.25 d. $31.75 e. $17.50

Answer 1

d. $31.75

Step-by-step explanation:

Computation for the total production cost per unit

Direct labor $8.50 per unit

Direct material $9.00 per unit

Variable overhead $6.75 per unit

Fixed overhead ($60,000/8,000 units) $7.50 per unit

Total production cost per unit $31.75

($8.50 + $6.75 + $9.00 + $7.50)

Therefore the total production cost per unit under variable costing if 20,000 units had been produced will be $31.75