Green Company has no beginning and ending inventories, and reports the following

Question

Green Company has no beginning and ending inventories, and reports the following information for its only product:

Direct materials used                                  $300,000

Direct labor                                                $150,000

Fixed indirect manufacturing                       $75,000

Variable indirect manufacturing                   $50,000

Variable selling and administrative              $60,000

Fixed selling and administrative                  $25,000

Units produced and sold                                50,000

Green Company uses the absorption approach to prepare the income statement. What is the product cost per unit?

A) $9.00

B) $11.25

C) $12.00

D) $12.75

Explanation / Answer

Direct materials used   300000 Direct labor 150000 Fixed indirect manufacturing   75000 Variable indirect manufacturing 50000 Total product cost 575000 Units produced 50000 Product cost per unit 11.50 Note: The correct answer doesn't match with any of the provided options.

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