Question

AAA Manufacturing​ Inc, makes a product with the following costs per​ unit: Direct materials $150 Direct labor $90 Manufacturing overhead​ (variable) $60 Manufacturing overhead​ (fixed) $120 Marketing costs $85 What would be the inventoriable cost per unit under variable costing and what would it be under absorption​ costing?

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Direct materials $150

Direct labor $90

Manufacturing overhead​ (variable) $60

Manufacturing overhead​ (fixed) $120

The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).

Variable costing:

Unitary production cost= 150 + 90 + 60= $300

Absorption costing:

Unitary production cost= 300 + 120= $420