QS 06-16 Absorption costing and overproduction LO C1

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

Direct labor$4.40Direct materials5.40Variable overhead6.40Total variable cost16.20Fixed overhead ($80,000/10,000 units)8.00Total product cost per unit$24.20

Required:

1.Compute the company's total product cost per unit under absorption costing if 12,500 units had been produced.

2.Fill in the blank withincreaseordecrease: