1.Product Cost
Product cost incurred to make 10,000 units | ||
Particulars | Per unit | 10,000units |
Direct material | 6.00 | 60,000.00 |
Direct Labour | 3.50 | 35,000.00 |
Variable manufacturing overhead | 1.50 | 15,000.00 |
Fixed manufacturin overhead | 4.00 | 40,000.00 |
Total Product costs | 15.00 | 150,000.00 |
Production or product costs refer to the costs incurred by a business from manufacturing a product or providing a service. Production costs can include a variety of expenses, such as labor, raw materials, consumable manufacturing supplies, and general overhead. Product costs may also include those incurred as part of the delivery of a service to a customer. Taxes levied by the government or royalties owed by natural resource-extraction companies also are treated as production costs.
2.Period Cost
Period cost incurred to sell 10,000 units | ||
Particulars | Per unit | 10,000units |
Fixed Selling Expense | 3.00 | 30,000.00 |
Fixed Administrative expense | 2.00 | 20,000.00 |
Sales Commission | 1.00 | 10,000.00 |
Variable Administrative expense | 0.50 | 5,000.00 |
Total Product costs | 6.50 | 65,000.00 |
Overhead or sales, general, and administrative (SG&A) costs are considered period costs. SG&A includes costs of the corporate office, selling, marketing, and the overall administration of company business. Period costs are not assigned to one particular product or the cost of inventory like product costs
3. Variable Cost for 8,000 unit sold
Variable cost incurred to 8,000 unit sold | ||
Particulars | Per unit | 8,000units |
Direct material | 6.00 | 48,000.00 |
Direct Labour | 3.50 | 28,000.00 |
Variable manufacturing overhead | 1.50 | 12,000.00 |
Sales Commission | 1.00 | 8,000.00 |
Variable Administrative expense | 0.50 | 4,000.00 |
Total Product costs | 12.50 | 100,000.00 |
A variable cost is a corporate expense that changes in proportion to production output. Variable costs increase or decrease depending on a company's production volume; they rise as production increases and fall as production decreases
4.Variable Cost incurred to 12,500 unit sold
Variable Cost Per Unit = 12.5
Number unit sold = 12,500
Total Variable Cost =(12.5*12,500) = 156,250
Note
in the absence of fixed cost details in question , I just multipiled with the number of units
If there is any information say fixed manufacturing overhead for 1,000 units is $ 4,000 and per unit is $4 (4000/1000)
then fixed matnufacturing overhead for 10,000 units will be $ 4,000 because fixed cost will not change with volume of production.
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