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A company produces a single product for which the following cost data are available.
Analysis by the management accountant has shown that 100% of direct material cost and 50% of direct labour cost are variable costs. 50% of production overhead and 100% of selling and distribution overhead are variable costs.
What is the marginal cost per unit?
Suggested Answer: B
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10 comments · newest first
AS
Ashton
12 months ago
Wait, are we sure about those percentages?
GA
Gary
12 months ago
I agree, $8 makes sense with those overheads.
EV
Evette
1 year ago
Not sure about that, seems high.
MA
Maryann
1 year ago
I think the marginal cost is $8.
JE
Jennifer
1 year ago
Direct material is fully variable, right?
IL
Ilona
1 year ago
If I remember right, we need to add up all the variable costs per unit. I think I got $8, but I might have missed something.
EU
Eura
1 year ago
I remember a practice question where we had to separate fixed and variable costs, but I can't recall the exact percentages for overheads.
RO
Rory
1 year ago
I think the marginal cost is mostly about variable costs, but I'm not sure if I calculated the overheads correctly.
KR
Kristofer
1 year ago
I feel like the selling and distribution overheads play a big role here, but I’m uncertain about how to apply the percentages to the total costs.
TA
Tammara
1 year ago
Hmm, I'm a bit unsure about this one. I know drug screening is a sensitive topic, so I'll need to carefully consider the legal and ethical implications of each option.