Question

Columbia Products produced and sold 1,200 units of the company’s only product in March. You have collected the following information from the accounting records:
Sales price (per unit) $125
Manufacturing costs:
Fixed overhead (for the month) 18,200
Direct labor (per unit) 10
Direct materials (per unit) 34
Variable overhead (per unit) 26
Marketing and administrative costs:
Fixed costs (for the month) 19,500
Variable costs (per unit) 5


Compute the following:
(1) Variable manufacturing cost per unit.
(2) Full cost per unit.

Answer 1

Answer:

1. $70

2. $106.42

Explanation:

(1) Variable manufacturing cost per unit:

= Direct labor + Direct material + Variable overhead

= $10 + $34 + $26

= $70

(2) Full cost per unit:

= Direct labor + Direct material + Variable overhead + Variable selling cost + (Fixed ÷ 1,200)

= $10 + $34 + $26 + $5 + [(19,500 + 18,200) ÷ 1,200)]

= $75 + $31.42

= $106.42