Question
a) Obama Company sells its product for $28 per unit. During 2020, it produced 27500 units and sold 11000 units (there was no beginning inventory).
a) Obama Company sells its product for $28 per unit. During 2020, it produced 27500 units and sold 11000 units (there was no beginning inventory). Costs per unit are: direct materials $6, direct labour $5, and variable overhead $4. Fixed costs are: $412500 manufacturing overhead, and $110000 selling and administrative expenses. The per-unit manufacturing cost under absorption costing is
| $15.00. |
| $30.00. |
| $34.00. |
| $52.50. |
b) Obama Company sells its product for $25 per unit. During 2020, it produced 27500 units and sold 15000 units (there was no beginning inventory). Costs per unit are: direct materials $5, direct labour $4, and variable overhead $3. Fixed costs are: $412500 manufacturing overhead, and $96250 selling and administrative expenses. The per-unit manufacturing cost under variable costing is
| $12.00. |
| $27.00. |
| $30.50. |
| $39.50. |
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