Charrd Corporation manufactures a gas operated barbecue grill. The following information relates to Charrd’s operations for last year:
Unit product cost under absorption costing is $46 per unit, Fixed manufacturing overhead cost for the year is $300,000, Fixed selling and administrative cost for the year is $125,000 and Units produced and sold are 25,000.
What is Charrd’s variable costing unit product cost?
a. $29
Selected: b. $34 This answer is correct.
c. $58
d. $63
Correct! Unit fixed manufacturing overhead is $300,000 divided by $25,000 which equals $12. Unit variable product cost equals Unit product cost of $46 less Unit manufacturing overhead of $12 which totals $34.