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

Question

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:
  

   
What is the absorption costing unit product cost for the month? (Round your intermediate calculations to whole dollar value.)

$114

$104

$152

$142

  Units in beginning inventory 0   Units produced 8,700   Units sold 8,500   Units in ending inventory 200   Variable costs per unit:     Direct materials $48     Direct labor $45     Variable manufacturing overhead $11     Variable selling and administrative $10   Fixed costs:     Fixed manufacturing overhead $330,600     Fixed selling and administrative $95,700

Explanation / Answer

Absorption costing focuses on absorbing the manufacturing cost per unit to the products manufactured.

Variable absorption cost per unit = Material + Labor + Variable manufacturing overhead = $48 + $45 + $11 = $104

Fixed manufacturing overhead per unit = $330,600 / 8,700 = $38 per unit.

Total absorption cost per unit = Fixed + Variable = $104 + $38 = $142 per unit.

So, option D is the correct option.

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