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Under absorption costing, a company had the following per unit costs when 10,000 units were produced.
Direct labor $2
Direct material $3
Variable OH $4
Total variable Cost $9
Fixed OH (50000/10000 units) 5
Total production cost per unit $14
Compute the companys total production cost per unit if 25,000 units had been produced.
Why might a manager of a company using absorption costing produce more units than can currently be sold?
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