Question

Excerpt from Areojet Corporation:

Per Unit Per Month Selling price $200,000
Direct materials 40,000
Direct labor 10,000
Variable manufacturing overhead 2,000
Fixed manufacturing overhead $140,000
Variable selling and administrative expenses 20,000
Fixed selling and administrative expenses 40,000

January February March Beginning inventory 0 0 3
Units produced 4 5 2
Units sold 4 2 5
Ending inventory 0 3 0

What is the unit product cost for the month of February, using the variable costing method?

Answer 1

Unit Product cost for the m/o February is $ 52000

Step-by-step explanation:

Given data

Variable Costing is costing method which assign only variable manufacturing cost to the inventory. All other expenses or cost are treated as period cost and are excluded from the cost of production.

Direct Material = 40000

Direct labor = 10000

Variable Manufacturing Overhead = 2000

Fixed Manufacturing overhead = 140000

Variable Selling & Administrative Expenses = 20000

Fixed Selling & Administrative Expenses = 40000

Unit Product Cost by Variable costing methods can be calculated as follows:

Unit Product Cost for the M/O February = (Direct Material + Direct Labor + Variable manufacturing overhead )

Unit Product cost for the m/o February= (40000 + 10000 + 2000)

Unit Product cost for the m/o February = 52000