Fortran Industries produces burner elements for stoves. Each element sells for $

Question

Fortran Industries produces burner elements for stoves.  Each element sells for $20, and the company sells approximately 2,000,000 elements each year.  Unit cost data for the year follows:

Direct material

$5.00

Direct labor

3.00

Other costs:

Variable

Fixed

   Manufacturing

$2.50

$5.00

   Distribution

1.50

1.00

The unit cost of an element for variable costing inventory purposes is:

Select one:

a. $15.50

b. $12.00

c. $10.50

d. $7.00

Direct material

$5.00

Direct labor

3.00

Other costs:

Variable

Fixed

   Manufacturing

$2.50

$5.00

   Distribution

1.50

1.00

Explanation / Answer

answer is c. $10.50

Direct material + Direct labor + Manufacturing

5+3+2.5= 10.5

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