Question

The following cost behavior patterns describe anticipated manufacturing costs for 2013: raw material, $7.60/unit; direct labor, $10.60/unit; and manufacturing overhead, $309,600 + $8.60/unit. Required: If anticipated production for 2013 is 36,000 units, calculate the unit cost using variable costing and absorption costing. (Round your answers to 2 decimal places.)

Answer 1

Answer: The answer is as follows:

Explanation:

Given that,

Raw material = $7.60/unit

Direct labor = $10.60/unit

Manufacturing overhead = $8.60/unit

(1) Unit cost under variable costing = Raw material + Direct labor + variable Manufacturing overhead

= 7.6 + 10.6 + 8.6

= 26.8

(2) Unit cost under absorption costing = Raw material + Direct labor + variable Manufacturing overhead + fixed Manufacturing overhead

= 7.6 + 10.6 + 8.6 + 8.6

= 35.4