Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 50,000 units will be produced, with the following total costs:
Direct materials ..... $120,000
Direct labor ..... 60,000
Variable overhead .. 25,000
Fixed overhead .. 220,000
Required:
1. Calculate the prime cost per unit.
2. Calculate the conversion cost per unit.
3. Calculate the total variable cost per unit.
4. Calculate the total product (manufacturing) cost per unit.
5. What if the number of units increased to 55,000 and all unit variable costs stayed the same?
Explain what the impact would be on the following costs: total direct materials, total direct labor, total variable overhead, total fixed overhead, unit prime cost, and unit conversion cost. What would the product cost per unit be in this case?