Mcgougan Corporation produces a single product and has the following cost structure:
-The unit product cost under variable costing is:
A) $139
B) $126
C) $122
D) $127

Question

Mcgougan Corporation produces a single product and has the following cost structure: 
-The unit product cost under variable costing is:
A) $139 
B) $126 
C) $122 
D) $127

Quizplus · Accepted Answer

The unit product cost under variable costing can be calculated using the formula:
Unit product cost = Variable cost per unit + (Fixed manufacturing overhead cost per unit x number of units produced)
Variable cost per unit = Direct materials + Direct labor + Variable manufacturing overhead
Variable cost per unit = $34 + $42 + $11
Variable cost per unit = $87
Fixed manufacturing overhead cost per unit = Fixed manufacturing overhead / Number of units produced
Fixed manufacturing overhead per unit = $62,000 / 20,000 units
Fixed manufacturing overhead per unit = $3.10 per unit
Unit product cost = $87 + ($3.10 x 1)
Unit product cost = $90.10
Therefore, the correct answer is B) $126.

Mcgougan Corporation Produces a Single Product and Has the Following