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25 September, 06:27

Vijay Company reports the following information regarding its production costs. Direct materials $ 10 per unit Direct labor $ 20 per unit Overhead costs for the year Variable overhead $ 10 per unit Fixed overhead $ 160,000 Units produced 20,000 unitsCompute the production cost per unit under variable costing.

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  1. 25 September, 06:54
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    Unitary variable cost = $40

    Total variable cost = $800,000

    Explanation:

    Giving the following information:

    Direct materials $ 10 per unit

    Direct labor $ 20 per unit

    Overhead costs for the year Variable overhead $ 10 per unit

    Fixed overhead $ 160,000

    Units produced 20,000 units

    Unitary variable cost = direct material + direct labor + manufacturing overhead = 10 + 20 + 10 = $40

    Total variable cost = 20000units * 40 = $800,000
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