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Novartis began its operations on January 1 and produces a single product that sells for $10.75 per unit. Standard capacity is 80,000 units per year.
Novartis began its operations on January 1 and produces a single product that sells for $10.75 per unit. Standard capacity is 80,000 units per year. The 80,000 units were produced and 72,000 units were sold during the year. Manufacturing costs and selling and administrative expenses follow:
Fixed Costs | Variable Costs | |
Raw materials | -- | $3.00 per unit produced |
Direct labor | -- | 1.50 per unit produced |
Factory overhead | $120,000 | 1.00 per unit produced |
Selling and administrative | 80,000 | .50 per unit sold |
What is the standard cost of manufacturing a unit of product?
a. | $5.50 | |
b. | $6.50 | |
c. | $7.00 | |
d. | $6.00 |
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