Question

Ross Corporation produces a single product. The company has direct materials costs of $8 per unit, direct labor costs of $6 per unit, and manufacturing overhead of $10 per unit. Sixty percent of the manufacturing overhead is for fixed costs. In addition, variable selling and administrative expenses are $2 per unit, and fixed selling and administrative expenses are $3 per unit at the current activity level.
Assume that direct labor is a variable cost. Under variable costing, the unit product cost is:

Multiple Choice

$18 per unit

$21 per unit

$20 per unit

$24 per unit

Answer 1

Answer:

Option A is correct

Explanation:

Under variable costing, the unit product cost is:=(Direct materials+Direct labor+Variable manufacturing overheads_)

= (8+6+(10*40%)

which is equal to

=$18 per unit(A).