The Wisconsin Company manufactures and sells a single product. The following cos

Question

The Wisconsin Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operation:
Variable cost per unit:
Manufacturing:
Direct materials $22
Direct Labor $ 5
Variable manufacturing overhead $ 4
Variable selling and administrative $ 6
Fixed costs per year:
Fixed manufacturing overhead $ 200,000
Fixed selling and administrative expenses $100,000

During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company’s product is $50 per unit.

Compute the company’s unit product cost under the variable costing method.

Explanation / Answer

Under variable costing unit product cost would be 22+5 +4+6= 37.

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