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17 January, 13:51

Grover Company has the following data for the production and sale of 2,500 units. Sales price per unit $ 950 per unit Fixed costs: Marketing and administrative $ 625,000 per period Manufacturing overhead $ 300,000 per period Variable costs: Marketing and administrative $ 40 per unit Manufacturing overhead $ 70 per unit Direct labor $ 130 per unit Direct materials $ 250 per unit What is the full cost per unit of making and selling the product?

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  1. 17 January, 17:25
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    Under Variable costing 490

    Under absorption costing 860

    Explanation:

    If Grover use variable costing:

    DM 250

    DL 130

    FO 70

    S&A 40

    Variable cost 490

    If Grover use absorption cost:

    The fixed cost will be include for the unit cost as well.

    S&A 625,000

    Overhead 300,000

    Total fixed 925,000

    The fixed Cost will be distribute among the 2,500 units produced

    925,000/2,500 = 370

    Lastly, variable and fixed are added for total unit cost

    Fixed + Variable = 370 + 490 = 860
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