Question

Vijay Company reports the following information regarding its production costs. Direct materials $9.60 per unit Direct labor $19.60 per unit Overhead costs for the year Variable overhead $9.60 per unit Fixed overhead $121,600 Units produced 16,000 units Compute its product cost per unit under absorption costing.

Answer 1

Unitary cost= $46.4 per unit

Step-by-step explanation:

Giving the following information:

Direct materials $9.60 per unit

Direct labor $19.60 per unit

Overhead costs for the year:

Variable overhead $9.60 per unit

Fixed overhead $121,600

Units produced 16,000 units

Under absorption costing, the fixed overhead is allocated to the cost of the product. Therefore, we need to calculate the unitary fixed overhead.

Unitary fixed overhead= 121,600/16,000= $7.6

Now, we can calculate the unitary cost of production:

Unitary cost= direct material + direct labor + total overhead

Unitary cost= 9.6 + 19.6 + 9.6 + 7.6= $46.4 per unit