Problem:
Under absorption costing a company had the following unit cost when 8000 units were produced.
- Direct Labor $8.50/ unit
- Direct Materials $9.00/ unit
- Variable Overhead $6.75/ unit
- Fixed Overhead ($60,000/8000 units) $7.50/ unit
Required:
Question: Compute total production cost per unit under absorption costing if 30,000 units were produced.
Note: Provide support for your rationale.