Question

A manufacturer reports the following costs to produce 27,000 units in its first year of operations:...

A manufacturer reports the following costs to produce 27,000 units in its first year of operations: Direct materials, $27 per unit, Direct labor, $23 per unit, Variable overhead, $243,000, and Fixed overhead, $378,000. The total product cost per unit under absorption costing is:

Multiple Choice

$50 per unit.

$59 per unit.

$73 per unit.

$64 per unit.

$36 per unit.

The following information is available for a company's utility cost for operating its machines over the last four months.

Month Machine hours Utility cost
January 1,030 $ 5,580
February 1,930 $ 7,160
March 2,660 $ 8,100
April 730 $ 3,610


Using the high-low method, the estimated variable cost per unit for utilities is:

Multiple Choice

$3.05.

$4.95.

$2.33.

$3.85.

$6.57.

Business   Accounting   
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Homework Answers

Answer #1
Q1.
Answer is 73 per unit
Explanation
Material 27
Labor 23
variabble oH (243000/27000) 9
Fixed mfg oh (378000/27000) 14
Unit product cost 73
Q2.
Answer is 2.33
Explanation
MH Utility cost
Hiigh-March 2660 8100
Low -April 730 3610
Change 1930 4490
VC per MH = Change in cost / Change in Mh
4490/1930 = 2.33 per Mh
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