In the month of November, the SuperSoap Company provided the following information: Using absorption costing the unit product cost would be:
A) $35.00
B) $30.00
C) $31.10
D) $36.10

Question

In the month of November, the SuperSoap Company provided the following information:  Using absorption costing the unit product cost would be:
A) $35.00 
B) $30.00 
C) $31.10 
D) $36.10

Quizplus · Accepted Answer

Absorption costing includes all manufacturing costs, both fixed and variable, in the unit product cost.

Direct materials: $9.00
Direct labor: $6.00
Variable manufacturing overhead: $5.00 (75% x $20.00)
Fixed manufacturing overhead: $8.00 ([$250,000 ÷ 12,500 units] - $5.00 variable OH)
Total unit product cost: $28.00
+ Selling and administrative expenses: $3.10
Unit sales price: $31.10

In the Month of November, the SuperSoap Company Provided the Following