A manufacturing company that produces a single product has provided the folowng

Question

A manufacturing company that produces a single product has provided the folowng data concering ts motr ncent mo Units in beginning inventory.... Units produced. Units in ending inventory Variable costs per unit: 7,300 7,200 100 $29 $49 $5 $4 Direct materials Variable manufacturing overhead.... Variable selling and administrative.. Fixed costs: $94,900 Fixed manufacturing overhead.…… Fixed selling and administrative $79,200 What is the absorption costing unit product cost for the month? O $96 per unit O 587 per unit O $100 per unit cearch

Explanation / Answer

Under absorption costing, the Fixed costs incurred are allocated to no. of units produced during the period.

Hence, the Fixed costs shall be allocated to no. of units produced during the month i.e. 7300 units.

But since we require only unit product cost, Selling Expenses shall not be added.

Hence, variable selling of $4 per unit and Fixed selling of $79200 shall not be added.

Fixed manufacturing overhead per unit = 94900 / 7300 = $13 per unit

Total Product cost = 29 + 49 + 5 + 13 = $96

Hence, the correct answer is (A) $96 per unit.

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