Question

Commonwealth Company has the following unit costs: direct materials $2, direct labor $4, variable overhead $1, fixed overhead $3. Under the absorption costing method, what is the total unit cost

Answer 1

Answer: Total unit cost =

variable costs + fixed costs

$2 + $4 + $1 + $3 = $10

Step-by-step explanation:

Total unit cost is calculated by the adding variable costs ( such as the direct material cost per unit, direct labor cost per unit and variable manufacturing overhead per unit,) and fixed costs (such as fixed manufacturing overhead per unit)

Therefore

Total unit cost = variable cost + fixed cost

Unit cost of direct materials = $2

Unit cost of direct labor = $4

Unit cost of variable overhead =$1

Unit cost of fixed overhead = $3

Total unit cost = $2 +$4 + $1 + $3 = $10