q. 14

The Colin Division of Mochrie Company sells its product for $35 per unit. Variable costs per unit are: manufacturing, $15.00; and selling and administrative, $2. Fixed costs are: $320000 manufacturing overhead, and $59000 selling and administrative. There was no beginning inventory. Expected sales for next year are 40000 units. Ryan Stiles, the manager of the Colin Division, is under pressure to improve the performance of the Division. As he plans for next year, he has to decide whether to produce 40000 units or 59000 units. What would the manufacturing cost per unit be under variable costing for each alternative?

40000units59000units

$15.00$15.00

$17.00$17.00

$21.40$23.00

$23.00$21.40