Required information [The following information applies to the questions displayed below.] Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 44,000 units and sold 36,000 units at a price of $150 per unit. Manufacturing costs Direct materials per unit $ 66 Direct labor per unit $ 25 Variable overhead per unit $ 9 Fixed overhead for the year $ 572,000 Selling and administrative costs Variable selling and administrative cost per unit $ 12 Fixed selling and administrative cost per year $ 110,000 1a. Assume the company uses absorption costing. Determine its product cost per unit.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Required information
[The following information applies to the questions displayed below.]
Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 44,000 units and sold 36,000 units at a price of $150 per unit.
| Direct materials per unit | $ | 66 | |
| Direct labor per unit | $ | 25 | |
| Variable |
$ | 9 | |
| Fixed overhead for the year | $ | 572,000 | |
| Selling and administrative costs | |||
| Variable selling and administrative cost per unit | $ | 12 | |
| Fixed selling and administrative cost per year | $ | 110,000 | |
1a. Assume the company uses absorption costing. Determine its product cost per unit.
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