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Under absorption costing, a company had the following unit costs when 18,000 units were produced.
Direct labor $2
Direct material 3
Variable overhead 4
Total variable cost 9
Fixed overhead ($50,000/10,000 units) 5
Total production cost per unit $14
Required:
Compute the company's total production cost per unit if 12,500 units had been produced. Total production cost per unit.

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Answer:

Total unitary cost= $13

Explanation:

Giving the following information:

Direct labor $2

Direct material 3

Variable overhead 4

Total variable cost= 9

Fixed overhead= $50,000

Units produed= 12,500

To calculate the total cost per unit, first, we need to calculate the unitary fixed overhead.

Unitary fixed overhead= 50,000/12,500= $4

Total unitary cost= 9 + 4= $13

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