Question

The estimated unit costs for a company to produce and sell a product at a level of 15,000 units per month are as follows:Cost Item Estimated Unit CostDirect material $ 38.00 Direct labor 23.00 Variable manufacturing overhead 21.00 Fixed manufacturing overhead 12.00 Variable selling expenses 4.00 Fixed selling expenses 5.50 What are the estimated variable costs per unit?a. $86.00b. $82.00c. $16.50d. $61.00e. $50.00

Answer 1

Estimated variable costs per unit=$86.

Option A is correct ($86.00)

Step-by-step explanation:

Variable cost are those which changes with the activity level. These costs are help in making decision because if we talk about fixed costs, fixed costs do not help in making decisions as they are sunk costs. Management uses variable costs for making the decisions.

Estimated variable costs per unit= Direct material+Direct labor+Variable manufacturing overhead+Variable selling expenses

Estimated variable costs per unit=$38+$23+$21+$4

Estimated variable costs per unit=$86.

Option A is correct ($86.00)