IE QS 6-13 (Static): Absorption costing and overproduction LO C1

Under absorption costing, a company had the following per unit costs when 10,000 units were produced.

Direct materials	$ 3
Direct labor	2
Variable overhead	4
Fixed overhead ($50,000/10,000 units)	5
Total product cost per unit	$ 14

1. Compute total product cost per unit under absorption costing if instead 12,500 units are produced. Total fixed overhead remains at $50,000.
2. If units produced is greater than units sold, will cost of goods sold under absorption costing increase or decrease?

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24 2. If units produced is greater than units sold, will cost of goods sold under absorption costing increase or decrease