Question

In: Accounting

If variable manufacturing costs are $10 per unit and total fixed manufacturing costs are $325,000, what...

If variable manufacturing costs are $10 per unit and total fixed manufacturing costs are $325,000, what is the manufacturing cost per unit if

a. 5,000 units are manufactured and the company uses the variable costing concept?
$

b. 6,500 units are manufactured and the company uses the variable costing concept?
$

c. 5,000 units are manufactured and the company uses the absorption costing concept?
$

d. 6,500 units are manufactured and the company used the absorption costing concept?
$

Expert Solution

Under variable costing manufacturing cost includes only the variable manufacturing costs and under absorption costing manufacturing cost includes variable as well as fixed manufacturing costs .

a. 5,000 units are manufactured and the company uses the variable costing concept

Here, manufacturing cost per unit = variable manufacturing cost per unit = $10

b. 6,500 units are manufactured and the company uses the variable costing concept

Here, manufacturing cost per unit = variable manufacturing cost per unit = $10

c. 5,000 units are manufactured and the company uses the absorption costing concept

Variable manufacturing cost per unit

$10

(+) Fixed manufacturing cost per unit

[ Total Fixed manufacturing cost / units manufactured = $325,000 / 5,000 units ]

$65

Manufacturing cost per unit

$75

d. 6,500 units are manufactured and the company used the absorption costing concept

Variable manufacturing cost per unit

$10

(+) Fixed manufacturing cost per unit

[ Total fixed manufacturing cost / units manufactured = $325,000 / 6,500 units ]

$50

Manufacturing cost per unit

$60

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