Sea Company reports the following information regarding its production cost: Uni

Question

Sea Company reports the following information regarding its production cost: Units produced 49,000 units Direct labor $42 per unit Direct materials $35 per unit Variable overhead $24 per unit Fixed overhead $122,500 in total Compute production cost per unit under absorption costing. $35.00 $103.50 $101.00 $77.00 $42.00

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Bioclean Co. sells a biodegradable cleaning product and has predicted the following sales for the first four months of the current year: Jan. Feb. March April Sales in units 2,150 2,350 2,550 2,050 Ending inventory for each month should be 10% of the next month's sales, and the December 31 inventory is consistent with that policy. How many units should be purchased in February? 2,605. 2,350. 2,370. 2,390. 2,330.

Explanation / Answer

1.Fixed overhead per unit=(122500/49000)=$2.5

production cost per unit under absorption costing=Direct material+Direct labor+Variable overhead+Fixed overhead

=(35+42+24+2.5)=$103.50

2.

Beginning inventory(10%*2350) 235 Add:purchases(balance)(2350+255-235) 2370. Less:ending inventory(10%*2550) (255) Sales 2350

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