EB14.

LO 6.5Crafts 4 All has these costs associated with production of 12,000 units of accessory products: direct materials, $19; direct labor, $30; variable manufacturing overhead, $15; total fixed manufacturing overhead, $450,000. What is the cost per unit under both the variable and absorption methods?

Instrucitons are listed below.

Explanation:

Giving the following information:

Production: 12,000 units

direct materials, $19

direct labor, $30

variable manufacturing overhead, $15

total fixed manufacturing overhead, $450,000

The difference between variable and absorption costing is that the last one includes fixed overhead in the product cost.

Variable costing:

Cost per unit = direct material + direct labor + variable manufactuing overhead = 19 + 30 + 15 = $64

Absorption costing:

Cost per unit = direct material + direct labor + variable manufactuing overhead + unitary fixed overhead = 19 + 30 + 15 + (450,000/12,000) = $101.5