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   • Learning Objective 3

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   Product Costs

   Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 50,000 units will be produced, with the following total costs:

   Direct materials	$120,000
   Direct labor	60,000
   Variable overhead	25,000
   Fixed overhead	220,000

   Required:

   If required, round your answers to the nearest cent.

   1. Calculate the prime cost per unit. $ per unit

   2. Calculate the conversion cost per unit. $ per unit

   3. Calculate the total variable cost per unit. $ per unit

   4. Calculate the total product (manufacturing) cost per unit. $ per unit

   5. What if the number of units increased to 55,000 and all unit variable costs stayed the same? indicate the impact on the following costs.

   a. Total direct materials

   • decreases by
   • does not change
   • increases by
   • less than 10%
   • 10%
   • more than 10%
   • no change

   b. Total direct labor

   • does not change
   • decreases by
   • increases by
   • less than 10%
   • 10%
   • more than 10%
   • no change

   c. Total variable overhead

   • does not change
   • decreases by
   • increases by
   • less than 10%
   • 10%
   • more than 10%
   • no change

   d. Total fixed overhead

   • does not change
   • decreases by
   • increases by
   • less than 10%
   • 10%
   • more than 10%
   • no change

   e. Unit prime cost

   • does not change
   • decreases by
   • increases by
   • less than 10%
   • 10%
   • more than 10%
   • no change

   f. Unit conversion cost

   • does not change
   • decreases by
   • increases by
   • less than 10%
   • 10%
   • more than 10%
   • no change

   What would the product cost per unit be in this case? $ per unit