[Zafar Syed]

Dear Sir/ Madam,
Can you please let me know how to calculate the cost per unit of production using the variable costing method and the absorption costing method

The Fixed cost for the year
Fixed manufacturing overhead $ 1180000
Fixed selling and administration $ 1130000

Production for the year = 25000 units
Sales for the year = 20000 units

The selling price of fixit ltd product is $60 per unit.
I have not included any variable cost like Raw material or labour or manufacturing ovhd please assume some cost for the variable cost and show me how to sole the problem

Thanks Zafar

[rehmanvohra]

Under absorption costing method, you will include the proportionate fixed overheads. Calculate the fixed overhead rate per unit and use that rate for the inventory in hand at the year end.

In marginal costing you will use only the variable manufacturing expenses.

[sigibah]

The variable cost varies with output. Fixed cost remained unchanged no matter the level of output. In calculating variable cost per unit, divide the total variable cost by the qty produced.