Cool Pool has these costs associated with production of 24,000 units of accessory products: direct materials, $65; direct labor, $105; variable manufacturing overhead, $55; total fixed manufacturing overhead, $1,080,000. What is the cost per unit under both the variable and absorption methods?

Cool Pool has these costs associated with production of 24,000 units of accessory products: direct materials, $65; direct labor, $105; variable manufacturing overhead, $55; total fixed manufacturing overhead, $1,080,000. What is the cost per unit under both the variable and absorption methods?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 14EA: Cool Pool has these costs associated with production of 20,000 units of accessory products: direct...

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Question

Cool Pool has these costs associated with production of 24,000 units of
accessory products: direct materials, $65; direct labor, $105; variable
manufacturing overhead, $55; total fixed manufacturing overhead,
$1,080,000. What is the cost per unit under both the variable and absorption
methods?
Variable
Absorption
Method
Method
Cost per unit $

Expert Solution

Step 1

Under the variable costing method, only variable costs are considered to be cost of production. Under the absorption costing method, both fixed and variable costs are considered to be part of the cost of production.

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