The estimated unit costs for a company to produce and sell a product at a level of 13,500 units per month are as follows:
Cost Item Estimated
Unit Cost
Direct material $ 34
Direct labor 22
Variable manufacturing
overhead 19
Fixed manufacturing
overhead 6
Variable selling
expenses 4
Fixed selling expenses 5
What are the estimated variable costs per unit?

The correct answer is $79.

Explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the estimated variable cost by using following formula:

Estimated variable cost = Direct material + Direct labor + Variable manufacturing  overhead + Variable selling  expenses

By putting the following value in the formula, we get

Estimated variable cost = $34 + $22 + $19 + $4

= $79

Hence, the estimated variable costs per unit is $79.

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