Question

Siren Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2020, the company incurred the following costs.

Variable Costs per Unit
Direct materials $7.58
Direct labor $3.48
Variable manufacturing overhead $5.86
Variable selling and administrative expenses $3.94
Fixed Costs per Year
Fixed manufacturing overhead $245,410
Fixed selling and administrative expenses $212,201

Siren Company sells the fishing lures for $25.25. During 2020, the company sold 82,000 lures and produced 97,000 lures.

Assuming the company uses variable costing, calculate Siren’s manufacturing cost per unit for 2020.

Answer 1

$16.92

Step-by-step explanation:

The computation of the manufacturing cost per unit using the variable costing is shown below:

= Direct material per unit + Direct labor per unit + Variable manufacturing overhead per unit

= $7.58 + $3.48 + $5.86

= $16.92

If we added the Direct material per unit, Direct labor per unit, and the Variable manufacturing overhead per unit so we get the manufacturing cost per unit