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Learned Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 5.20 Direct labor $ 3.70 Variable manufacturing overhead $ 1.30 Fixed manufacturing overhead $ 33,750 Sales commissions $ 0.60 Variable administrative expense $ 0.50 Fixed selling and administrative expense $ 11,250 Required: a. For financial reporting purposes, what is the total amount of product costs incurred to make 7,500 units

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Answer:

Results are below.

Explanation:

Giving the following information:

Direct materials $5.20

Direct labor $ 3.70

Variable manufacturing overhead $1.30

Fixed manufacturing overhead $ 33,750

Units produced= 7,500

We will calculate the product cost based on absorption costing and variable costing. The first one includes the fixed manufacturing overhead as a product cost.

Variable costing method:

Total cost= (5.2 + 3.7 + 1.3)*7,500

Total cost= $76,500

Absorption costing method:

Tota cost= 76,500 + 33,750

Total cost= $110,250

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