Mega-Thirst Produces an Energy Drink Called Mega-Caffeine

Multiple Choice

Mega-Thirst produces an energy drink called Mega-Caffeine. The drinks sell to grocery stores and other retailers for $10 a case. During September, the first month of production, the company used $65,000 of aluminum cans and $35,000 of syrup, soda and caffeine. September manufacturing wages were $60,000 and variable manufacturing overhead incurred was $20,000. September's fixed manufacturing overhead costs were $70,000 and fixed selling and administrative costs were $12,000. Selling commissions were $0.25 per case.
- Mega-Thirst sold 46, 000 of the 50,000 cases that were produced in September for $10 per case.
If the company plans to increase selling commissions to $0.30 per case, and all other costs would remain the same, how will this affect per unit costs?

A) There will be no change to either.
B) Variable cost per unit will decrease, but absorption cost per unit will stay the same.
C) Variable cost per unit will stay the same, but absorption cost per unit will decrease.
D) Variable cost per unit will decrease, and absorption cost per unit will decrease.