Reference no: EM132877568

Question - Absorption costing and overproduction - Under absorption costing, a company had the following per unit costs when 10,000 units were produced.

Direct labor $4.40

Direct materials 5.40

Variable overhead 6.40

Total variable cost 16.20

Fixed overhead ($80,000/10,000 units) 8.00

Total product cost per unit $24.20

Required -

1. Compute the company's total product cost per unit under absorption costing if 12,500 units had been produced.

2. Fill in the blank with increase or decrease.