Olds Inc., which produces a single product, has provided the following data for

Question

Olds Inc., which produces a single product, has provided the following data for its most recent month of operations Variable costs per unit Direct materials Direct labor Variable manufacturing overhead Variable selling Fixed costs Fixed manufacturing overhead Fixed selling and administrative expense $85 and administrative expense $10 $161,000 $326,600 There were no beginning or ending inventories. The absorption costing unit product cost was: O $176 per unit O $218 per unit O $183 per unit O $299 per unit 0 Type here to search

Explanation / Answer

Absorption Costing:

Direct Materials = $91
Direct Labor = $85
Variable Manufacturing Overhead = $7
Fixed Manufacturing Overhead = $161,000
Number of units produced = 4,600

Unit Cost = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead per unit produced
Unit Cost = $91 + $85 + $7 + $161,000/4,600
Unit Cost = $218

So, unit product cost per unit is $218

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