1 How is unit cost calculated A It is calculated by multiply

1. How is unit cost calculated?

A. It is calculated by multiplying total units by total costs.

B. It is calculated by adding all cost drivers.

C. It is calculated by subtracting the ending work in process from the total sales of the period.

D. It is calculated by dividing the total costs for the period by the total output of the period.

Solution

The Answer is “D. It is calculated by dividing the total costs for the period by the total output of the period “

Unit Cost = Total Cost for the period / Number of units of output produced during that period

The Above formula can be elaborated as follows ;

Unit Cost = [ Direct material costs + Direct Labor costs +Variable overhead cost + Fixed overhead cost ] / Number of units of output