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E4-6 Computing unit costs at different levels of production French Fragrances, Ltd. budgeted for 12,000 bottles of perfume Belle during May. The unit cost of Belle 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 manufac- tured? (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.

E4-6 Computing unit costs at different levels of production French Fragrances, Ltd. budgeted for 12,000 bottles of perfume Belle during May. The unit cost of Belle 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 manufac- tured? (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.

Principles of Cost Accounting
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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E4-6 Computing unit costs at different levels of production French Fragrances, Ltd. budgeted for 12,000 bottles of perfume Belle during May. The unit cost of Belle 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 manufac- tured? (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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