Under Absorption Costing a Company Had the Following Unit Costs

question 68

True/False

Under absorption costing a company had the following unit costs when 10,000 units were produced.
The total production cost per unit under absorption costing if 25,000 units had been produced would be $11.

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Definitions:

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Per Unit Basis

A method of expressing costs, pricing, or other financial measures on a per single unit of product or service basis.

Indirect Costs

Expenses not directly tied to a specific product or service, such as overheads, that are necessary for running a business.

Variable Costs

Costs that change in proportion to the level of production or sales activity, such as raw materials and direct labor.