Determining absorption costing

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Reference no: EM1365029

Under absorption costing a company had the following per unit costs when 10,000 units were produced.

Direct Labor ................................... $2
Direct Materials............................. 3
Variable Overhad......................... 4
Total Variable Cost ................................$9
Fixed overhead ($50,000/10,000 units) 5
Total production cost per unit................ $14

Required

1- Compute the company's total production cost per unit if 25,000 units had been produced.

2- Why might a manager of a company using absorption costing produce more units than can currently be sold?

Reference no: EM1365029

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