Question

Barredo Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.60 Direct labor $ 3.65 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 2.80 Fixed selling expense $ 0.70 Fixed administrative expense $ 0.40 Sales commissions $ 0.50 Variable administrative expense $ 0.45 If 4,000 units are sold, the variable cost per unit sold is closest to:

Answer 1

Answer:

The variable cost per unit sold is closest to $11.90.

Explanation:

Only variable manufacturing costs are included in product costing under the variable costing method.

Both the fixed manufacturing costs and non-manufacturing costs are treated as period costs, expensed in the profit and loss.

Calculation of Variable Unit Cost

Direct materials                                  $ 6.60

Direct labor                                         $ 3.65

Variable manufacturing overhead     $ 1.65

Total Variable Unit Cost                     $11.90

Conclusion :

The variable cost per unit sold is closest to $11.90.