Under Absorption Costing, a Company Had the Following Unit Costs

question 9

Multiple Choice

Under absorption costing, a company had the following unit costs when 8,000 units were produced. $\begin{array}{lr}\text { Direct labor } & \$ 8.50 \text { per unit } \\\text { Direct material } & \$ 9.00 \text { per unit } \\\text { Variable overhead } & \$ 6.75 \text { per unit } \\\text { Fixed overhead }(\$ 60,000 / 8,000 \text { units }) &\underline{ \$ 7.50 \text { per unit }} \\\text { Total production cost } & \underline{\$ 31.75 \text { per unit }}\end{array}$ Compute the total production cost per unit under variable costing if 20,000 units had been produced.

• A)$31.75
• B)$27.25
• C)$26.25
• D)$24.25
• E)$17.50

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