Reference no: EM132744406

Question - A business sells one product and they report the following:

Direct Material cost $4 per unit

Direct Labor cost $8 per unit

Variable Overhead cost $5 per unit

Fixed Overhead cost $90,000 per year

Variable selling/administrative expenses $1 per unit

Fixed selling/administrative expenses $10,000 per year

Sale Price $23 per unit

Required -

1. Calculate the product cost per unit using absorption costing.

2. Calculate the product cost per unit using variable costing.

3. Calculate the number of units the business needs to sell to break-even.

4. Calculate the number of units they need to sell to earn a before tax profit of $20,000.