Answer and Explanation:
The computation of the unit product cost using absorption costing and variable costing is shown below
Under absorption costing
Particulars 2,000 units 2,500 units 5,000 units
Direct materials per unit $41 $41 $41
Direct labor per unit $57 $57 $57
Variable manufacturing
overhead per unit $7 $7 $7
Fixed manufacturing
overhead per unit $10 $8 $4
($20,000 ÷ 2,000 units) ($20,000 ÷ 2,500 units) ($20,000 ÷ 5,000 units)
Unit product cost $115 $113 $109
Under variable costing
Particulars 2,000 units 2,500 units 5,000 units
Direct materials per unit $41 $41 $41
Direct labor per unit $57 $57 $57
Variable manufacturing
overhead per unit $7 $7 $7
Unit product cost $105 $105 $105
