Question

Under absorption costing, a company had the following unit costs when 9,000 units were produced.
Direct labor $7.25 per unit
Direct material $8.00 per unit
Variable overhead $5.50 per unit
Fixed overhead ($67,500/9,000 units) $7.50 per unit
Total production cost $28.25 per unit
Compute the total production cost per unit under variable costing if 30,000 units had been produced.
A. $31.75
B. $28.25
C. $23.45
D. $15.25
E. $20.75

Answer

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