Question

Obama Company sells its product for $25 per unit. During 2012, it produced 20,000 units and sold 15,000 units (there was no beginning inventory). Costs per unit are: direct materials $5, direct labour $4, and variable overhead $3. Fixed costs are: $300,000 manufacturing overhead, and $50,000 selling and administrative expenses. The per unit manufacturing cost under variable costing is
a) $12.

b) $27.

c) $29.50.

d) $32.

Answer 1

Answer:

Unitary cost= $12

Explanation:

Giving the following information:

direct materials $5

direct labor $4

variable overhead $3

The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead) to calculate the product unitary cost.

Unitary cost= 5 + 4 + 3= $12