Question

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 159 Units in beginning inventory 0 Units produced 7,050 Units sold 6,750 Units in ending inventory 300 Variable costs per unit: Direct materials $ 27 Direct labor $ 57 Variable manufacturing overhead $ 21 Variable selling and administrative expense $ 21 Fixed costs: Fixed manufacturing overhead $ 190,350 Fixed selling and administrative expense $ 28,500 What is the unit product cost for the month under variable costing

Answer 1

Answer:

The $105 per unit is the product cost for the month under variable costing.

Explanation:

Variable Costing Method : Under variable costing method, the direct material, labor, and variable cost such as variable manufacturing overhead, variable selling and administrative expense etc,

Product cost : The product cost is that cost which is related to the material such as direct material cost, direct labor cost, variable manufacturing overhead cost, etc.

Since the question is asking about per unit of product cost so we recognize these cost only which is shown below.

The computation of unit product cost under variable costing is shown below:

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

=  $27 + $57 + $21

= $105 per unit product cost.

Thus,  the $105 per unit is the product cost for the month under variable costing.