Bueno Company provided the following information regarding its one and only product-ice skates. $\begin{array}{ll}
\text { Direct materials used } & \$ 200,000 \
\text { Direct labor } & 80,000 \
\text { Fixed overhead } & 100,000 \
\text { Fixed s elling and administrative costs } & 150,000 \
\text { Variable overhe ad } & 20,000 \
\text { Variable selling and administrative } & 60,000 \
\text { Selling unit price } & 75 \
\text { Units produced and sold } & 10,000
\end{array}$ is the manufacturing cost per unit if the absorption approach is used.
A) $28
B) $40
C) $36
D) $30

Question

Quizplus · Accepted Answer

Under the absorption approach, manufacturing cost per unit includes direct materials, direct labor, variable overhead, and fixed overhead. Total manufacturing costs = $200,000 (Direct materials) + $80,000 (Direct labor) + $20,000 (Variable overhead) + $100,000 (Fixed overhead) = $400,000. Dividing by 10,000 units gives $40 per unit.

Bueno Company Provided the Following Information Regarding Its One and Only