Question

Bobbys Company which produces a single product, has provided the following data for its most recent month of operations:

Number of units produced		3,700
Variable costs per unit:
Direct materials	$	43
Direct labor	$	27
Variable manufacturing overhead	$	10
Variable selling and administrative expense	$	5
Fixed costs:
Fixed manufacturing overhead	$	318,200
Fixed selling and administrative expense	$	314,500

There were no beginning or ending inventories. The variable costing unit product cost was:

A. $166 per unit

B. $80 per unit

C. $85 per unit

D. $75 per unit

Answer 1

Variable costs per unit basis remain the same and amount changes with the level of units produced or sold whereas the fixed cost remains same at the amount level.

In the given case the variable cost per unit are given , for 3700 units.

Variable costs include the direct material, direct labor,. variable manufacturing overhead and variable selling and administrative expenses.

Variable cost ,per unit = Direct Material + Direct labor + variable manufacturing overhead ,+ variable selling and administrative expenses.

Variable cost per unit = $ 43 + $ 27 + $ 10 + $ 5 = $ 85 per unit.

Thus The variable costing unit product cost was = $ 85.

Thus the correct Option is--------C i.e $ 85.