Penna Corporation produces a single product and has the following cost structure

Question

Penna Corporation produces a single product and has the following cost structure: Number of units produced each year 1,000 Variable costs per unit:      Direct materials $40      Direct labor $16      Variable manufacturing overhead $1      Variable selling and administrative expenses $1 Fixed costs per year:      Fixed manufacturing overhead $12,000      Fixed selling and administrative expenses $34,000
Required:

a. Compute the unit product cost under absorption costing. Show your work! (5 points)

b. Compute the unit product cost under variable costing. Show your work! (5 points) Penna Corporation produces a single product and has the following cost structure: Number of units produced each year 1,000 Variable costs per unit:      Direct materials $40      Direct labor $16      Variable manufacturing overhead $1      Variable selling and administrative expenses $1 Fixed costs per year:      Fixed manufacturing overhead $12,000      Fixed selling and administrative expenses $34,000
Required:

a. Compute the unit product cost under absorption costing. Show your work! (5 points)

b. Compute the unit product cost under variable costing. Show your work! (5 points) Number of units produced each year 1,000 Variable costs per unit:      Direct materials $40      Direct labor $16      Variable manufacturing overhead $1      Variable selling and administrative expenses $1 Fixed costs per year:      Fixed manufacturing overhead $12,000      Fixed selling and administrative expenses $34,000

Explanation / Answer

a)unit product cost under absorption costing is =Direct material+Direct labor+Variable manufacturing overhead+Fixed manufacturing overhead =$40+$16+$1+$12000 =$12057 b)unit product cost under variable costing is =Direct material+Direct labor+Variable manufacturing overhead =$40+$16+$1+=$57

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