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Question
Under absorption costing, a company had the following unit costs when 10,000 units were produced:Direct labor $2 per unit
Direct material $3 per unit
Variable overhead $4 per unit
Total variable $9 per unit
Fixed overhead ($50,000/10,000 units) $5 per unit
Total production cost $14 per unit
The total product cost per unit under absorption costing if 25,000 units had been produced would be $11.
Answer
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