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16 January, 18:37

EB14.

LO 6.5Crafts 4 All has these costs associated with production of 12,000 units of accessory products: direct materials, $19; direct labor, $30; variable manufacturing overhead, $15; total fixed manufacturing overhead, $450,000. What is the cost per unit under both the variable and absorption methods?

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  1. 16 January, 21:49
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    Instrucitons are listed below.

    Explanation:

    Giving the following information:

    Production: 12,000 units

    direct materials, $19

    direct labor, $30

    variable manufacturing overhead, $15

    total fixed manufacturing overhead, $450,000

    The difference between variable and absorption costing is that the last one includes fixed overhead in the product cost.

    Variable costing:

    Cost per unit = direct material + direct labor + variable manufactuing overhead = 19 + 30 + 15 = $64

    Absorption costing:

    Cost per unit = direct material + direct labor + variable manufactuing overhead + unitary fixed overhead = 19 + 30 + 15 + (450,000/12,000) = $101.5
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