Question
The Colin Division of Pharoah Company sells its product for $35.00 per unit. Variable costs per unit include: manufacturing, $12.90; and selling and administrative, $4.00.
The Colin Division of Pharoah Company sells its product for $35.00 per unit. Variable costs per unit include: manufacturing, $12.90; and selling and administrative, $4.00. Fixed costs are: $432000 manufacturing overhead, and $56000 selling and administrative. There was no beginning inventory. Expected sales for next year are 54000 units. Kenneth Clark, the manager of the Colin Division, is under pressure to improve the performance of the Division. As part of the planning process, he has to decide whether to produce 54000 units or 56000 units next year. What would the manufacturing cost per unit be under variable costing for each alternative? 54000 units 56000 units
$16.90 $16.90
$19.65 $20.90
$12.90 $12.90
$20.90 $19.65
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