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Company produces 4,000 chocolate bars. Sold 3,500. No bars at the beginning. Variable Cost per...

Question:

Company produces 4,000 chocolate bars.

Sold 3,500.

No bars at the beginning.

Variable Cost per unit:

Production $4

Selling and administrative $1

Fixed Cost in total:

Production $12,000

Selling and administrative $8,000

Calculate the unit production cost, assuming company uses variable costing.

Variable Costing:

Variable costing is an approach to compute the net income. The income statement under variable costing computes contribution margin. It consists of a variable cost of goods sold and variable operating expenses.

Answer and Explanation:

Under variable costing, the production costs consists of items in variable. The fixed production costs is charged as an expense. Here, the unit production costs is the variable production cost per unit. Therefore, the unit production cost under variable costing is $4.


Learn more about this topic:

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Variable Costing: Method, Formula & Advantages

from Financial Accounting: Help and Review

Chapter 13 / Lesson 5
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