Question

Hayes Inc. provided the following information for the current year: Beginning inventory 180 units Units produced...

Hayes Inc. provided the following information for the current year:

Beginning inventory 180 units
Units produced 830 units
Units sold 876 units
Selling price $ 230 /unit
Direct materials $ 43 /unit
Direct labor $ 24 /unit
Variable manufacturing overhead $ 23 /unit
Fixed manufacturing overhead $ 33,200 /yr
Variable selling/administrative costs $ 16 /unit
Fixed selling/administrative costs $ 23,500 /yr


What is the unit product cost for the year using variable costing?

Multiple Choice

  • $130

  • $90

  • $106

  • $168

Business   Accounting   
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Homework Answers

Answer #1
  • Correct Answer = Option #2: $ 90

Unit product Cost

Variable costing

Direct Material

$43.00

Direct Labor

$24.00

Variable factory overhead

$23.00

Fixed factory overhead

$0.00

Total unit product cost

$90.00

  • Fixed factory/manufacturing overhead are not part of product cost under ‘variable costing’
  • Selling & Admin Expenses (Fixed or variable) do not form part of product cost whether variable costing is in used or absorption costing.
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