Acompany had the following unit costs when 9,000 units were produced: direct labor at $7.25 per unit; direct material at $8.00 per unit; variable overhead at $5.50 per unit; fixed overhead at ($67,500/9,000 units) $7.50 per unit; and a total production cost of $28.25 per unit. under absorption costing, what is the total production cost per unit if 25,000 units had been produced? a. $28.25b. $23.45c. $26.25d. $20.75e. $15.25

Total production cost per unit = $8 +$7.25 + $5.50 = $20.75

Explanation:

Given :

Direct labor at $7.25 per unit;

Direct material at $8.00 per unit;

Variable overhead at $5.50 per unit;

Fixed overhead at ($67,500/9,000 units) $7.50 per unit;

Total production cost of $28.25 per unit.

Now,

Under Absorption Costing, the total production cost per unit is calculated as

Total production cost per unit = Direct Materials +Direct Labor + Variable Overhead

Total production cost per unit = $8 +$7.25 + $5.50 = $20.75