Q3SE - Horngren'S Financial And Managerial Accounting

Question

Computing unit product cost, variable costing Calculate the unit product cost using variable costing. Round your answer to the nearest cent.

Use the following information for Short Exercises S21-2 and S21-3. 

Martin Company had the following costs: 

Units produced                                                      320 units                                                                       Direct materials                                                  $ 71 per unit                                                               Direct labor                                                            40 per unit                                                                 Variable manufacturing overhead                        13 per unit                                                                Fixed manufacturing overhead                             7,360 per year                                                              Variable selling and administrative costs           22 per unit                                                        Fixed selling and administrative costs                1,920 per year

Step-by-Step Solution

Answer

Answer

 

The total unit product cost is $124.

 

Step 1: Calculation of fixed manufacturing overhead

Fixed manufacturing overheads are treated as a period cost under the variable cost method and do not consider while calculating unit product cost.

Step 2: Calculation of unit product cost

Particulars	Amount
Direct material	$71
Direct labor	$40
Variable manufacturing overhead	$13
Total unit product cost	$124