During its first year of operations, Beta Company paid $26,310 for direct materials and $18,100
in wages for production workers. Lease payments and utilities on the production facilities
amounted to $7,100. General, selling, and administrative expenses were $8,100. The company
produced 5,100 units and sold 4,100 units for $15.10 a unit. The average cost to produce one unit
is which of the following amounts? (Round your final answer to 2 decimal places.)
$11.69
$10.10
$8.15
$12.56
Solution
The Average Cost of Production per unit is as follows :-
Therefore, the average cost of production per unit is $ 10.10.
Note : General, selling, and administrative expenses are not included in Cost of Production.
Particulars Total Amount ($) No of Units Per unit
Direct Material 26310 5100 5.16
Wages 18100 5100 3.55
Lease Payments 7100 5100 1.39
Total Cost of Production 51510 10.10