Let's say that ABC company manufactures and sells 20,000 units of its product yearly. A single product includes these costs: Direct materials: $3 per unit Direct labor: $5 per unit Variable manufacturing overhead: $2 per unit Fixed manufacturing overhead: $35,000 per year, which computes to a $1.75 per unit cost ($35,000/20,000 annual units) Can you explain what the per unit cost of the product would be under the Absorption and Variable costing methods?
Let's say that ABC company manufactures and sells 20,000 units of its product yearly. A single product includes these costs: Direct materials: $3 per unit Direct labor: $5 per unit Variable manufacturing overhead: $2 per unit Fixed manufacturing overhead: $35,000 per year, which computes to a $1.75 per unit cost ($35,000/20,000 annual units) Can you explain what the per unit cost of the product would be under the Absorption and Variable costing methods?
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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Let's say that ABC company manufactures and sells 20,000 units of its product yearly. A single product includes these costs:
- Direct materials: $3 per unit
- Direct labor: $5 per unit
- Variable manufacturing
overhead : $2 per unit - Fixed manufacturing overhead: $35,000 per year, which computes to a $1.75 per unit cost ($35,000/20,000 annual units)
Can you explain what the per unit cost of the product would be under the Absorption and Variable costing methods?
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