Question

What is the unit product cost under Absorption Costing

Answer 1

Product unit cost = Direct Material per unit + Direct Labour per unit + Variable Overhead cost per unit + Fixed Overhead absorption per unit.

As per above, All cost per unit will be available with us except Fixed Overhead absorbed cost per unit.

Fixed Overhead cost absorption = Total fixed Overheads / Number of Production units

That gives us fixed overhead absorbed cost per unit. This cost not same for per unit every time if number of production units changed then fixed overhead cost will also changed. While variable cost per unit remain same for Everytime.