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Multiple Choice QuestionDirect materials are $15 per unit; direct labor is $7 per unit and variable overhead costs are $2 per unit. If total product costs are $27, what are fixed costs per unit?Multiple choice question.$30$24$3

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Multiple Choice QuestionDirect materials are 15perunit;directlaboris15 per unit; direct labor is 7 per unit and variable overhead costs are 2perunit.Iftotalproductcostsare2 per unit. If total product costs are 27, what are fixed costs per unit?Multiple choice question.303024$3

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Solution

The total product costs are given as $27 per unit. This cost is made up of direct materials, direct labor, and variable overhead costs.

Step 1: Calculate the total variable costs per unit. Direct materials per unit = 15Directlaborperunit=15 Direct labor per unit = 7 Variable overhead costs per unit = 2Totalvariablecostsperunit=2 Total variable costs per unit = 15 + 7+7 + 2 = $24

Step 2: Subtract the total variable costs per unit from the total product costs per unit to find the fixed costs per unit. Fixed costs per unit = Total product costs per unit - Total variable costs per unit Fixed costs per unit = 2727 - 24 = $3

So, the fixed costs per unit are $3.

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