Variable
This last point can be made clear with a very simple illustration. Assume that a company produces 10,000 units of a product, and per unit costs are $2 for direct material, $3 for direct labor, and $4 for variable factory overhead. In addition, fixed factory overhead amounts to $10,000. 7-* * Harvey Company produces 25,000 units of a single product. Variable manufacturing costs total $10 per unit. Variable selling and administrative expenses are $3 per unit. Fixed manufacturing overhead for the year is $150,000 and fixed selling and administrative expenses for the year are $100,000. 7-* * The unit product costs under absorption and variable costing would be $16 and $10, respectively. There is also a variable cost component related to running the machines on the factory floor. The fixed component in this example is $3,000 per month. The variable cost component is $10 per unit of output. Hence, at a production level of 500 units, the total electric cost is $8,000 [$3,000 + ($10 x 500)]. The variable manufacturing cost is $600 per unit, which consists of $300 in direct materials, $200 in direct manufacturing labor, and $100 in variable manufacturing overhead. The fixed manufacturing overhead costs are $50,000. Samuels manufactured 22,000 units of product during May using 108,000 pounds of direct material and 28,000 direct labor hours. Estimated fixed manufacturing overhead for May was $54,000. Actual total overhead was $70,000, of which $53,000 was fixed. The variable overhead rate is $0.80 per unit. (D) Variable non-manufacturing costs. 15-2: At a production level of 100 units, the per unit cost under Absorption Costing is $8, which consists of $2 of direct materials, $2 of direct labor, $2 of variable manufacturing overhead, and $2 of fixed manufacturing overhead.
http://www.principlesofaccounting.com/chapter23/chapter23.html http://www.csus.edu/indiv/p/pforsichh/documents/chap007variablecosting.ppt http://www.albany.edu/~dc641869/Chapter04.htm http://denniscaplan.fatcow.com/Chapter15EOC.htm http://www.unf.edu/~dtanner/StudyHall2071/studyprobes/2071_46Prob.htm http://denniscaplan.fatcow.com/Chapter15EOC.htm
is factory labor per unit fixed or variable