Budgeted Profit per Unit Calculation Steps:

• Variable cost per unit = direct materials ($10) + direct labour ($35) = $45.
• Total direct labour hours = 5,000 units × 5 hours/unit = 25,000 hours.
• Fixed overhead absorption rate = $75,000 ÷ 25,000 hours =$3 per hour; per unit = $3 × 5 hours =$15.
• Total cost per unit = $45 +$15 = $60; profit per unit =$80 - $60 =$20.

Why A is correct:

• Matches the absorption costing formula: profit per unit = selling price - (variable costs + fixed overheads absorbed per unit).

Why the others are wrong:

• B: Understates profit by over-allocating fixed costs (e.g., total fixed as variable).
• C: Subtracts an incorrect fixed cost (possibly $13 error in absorption).
• D: Ignores fixed overhead absorption, using only variable costing ($80 -$45 = $35).

Final answer: A