Question

Under absorption costing, a company had the following unit costs when 9,000 units were produced. Direct labor $ 7.25 per unit Direct material $ 8.00 per unit Variable overhead $ 5.50 per unit Fixed overhead ($67,500/9,000 units) $ 7.50 per unit Total production cost $ 28.25 per unit Compute the total product cost per unit under absorption costing if 25,000 units had been produced.

Answer 1

Answer:

$23.45 per unit

Explanation:

Given that,

Units produced = 9,000 units

Direct labor = $7.25 per unit

Direct material = $8.00 per unit

Variable overhead = $5.50 per unit

Total production cost = $28.25 per unit

Fixed overhead:

= $67,500 ÷ 25,000 units

= $2.70 per unit

Total product cost per unit:

= Direct material cost per unit + Direct labor cost per unit + Variable overhead cost per unit + Fixed overhead

= $8.00 per unit + $7.25 per unit + $5.50 per unit + $2.70 per unit

= $23.45 per unit