Questions:
Scentsation, Inc., budgeted for 12,000 bottles of perfume Oui during the month of May. The unit cost of Oui was $20, consisting of direct materials, $7; direct labor, $8; and factory overhead, $5 (fixed, $2; variable, $3).
a. What would be the unit cost if 10,000 bottles were manufactured?
b. What would be the unit cost if 20,000 bottles were manufactured?
c. Explain why a difference occurs in the unit costs.