Answered: a. What would be the unit cost if…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 6E: Computing unit costs at different levels of production French Fragrances, Ltd. budgeted for 12,000...

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Computing unit costs at different levels of production Scentsation, Inc., budgeted for 12,000 bottles of perfume Oui during the month of May. The unit cost of Oui was $20, consisting of direct materials, $7; direct labor, $8; and factory overhead,$5 (fixed, $2; variable, $3).
a. What would be the unit cost if 10,000 bottles were manufactured? (Hint: You must first determine the total fixed costs.)
b. What would be the unit cost if 20,000 bottles were manufactured?
c. Explain why a difference occurs in the unit costs.

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