Fairfield Corporation uses an actual cost system and produces a single product.

Question

Fairfield Corporation uses an actual cost system and produces a single product. Information about the product X for the past year is as follows: Production Sales (units) Selling price (per unit) Machine hours 100,000 80,000 $16.00 50,000 Manufacturing costs: Direct materials Direct labour Variable overhead Fixed overhead $80,000 $240,000 $40,000 $200,000 Non-manufacturing costs: Variable selling Fixed selling $48,000 $20,000 There were no beginning inventories. If Fairfield used variable costing, the unit product cost would be O a. $3.60 b. $4.08 C. $2.80 o d. $3.20

Explanation / Answer

Direct materials 0.8 =80000/100000 Direct labor 2.4 =240000/100000 Variable overhead 0.4 =40000/100000 Unit product cost 3.6 Option A is correct

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