Under Absorption Costing, a Company Had the Following Unit Costs

question 34

True/False

Under absorption costing, a company had the following unit costs when 10,000 units were produced:
$\begin{array}{lr}\text { Direct labor } & \$ 2 \text { per unit } \\\text { Direct material } & \$ 3 \text { per unit } \\\text { Variable overhead } &\underline { \$ 4 \text { per unit }} \\\text { Total variable } & \$ 9 \text { per unit } \\\text { Fixed overhead }(\$ 50,000 / 10,000 \text { units }) & \underline {\$ 5 \text { per unit }} \\\text { Total production cost } & \underline {\$ 14 \text { per unit }}\end{array}$ The total production cost per unit under absorption costing if 25,000 units had been produced would be $11.

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