A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the absorption costing unit product cost for the month?
A) $124 per unit
B) $132 per unit
C) $113 per unit
D) $143 per unit

Question

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:  What is the absorption costing unit product cost for the month?
A) $124 per unit 
B) $132 per unit 
C) $113 per unit 
D) $143 per unit

Quizplus · Accepted Answer

Absorption costing includes both variable and fixed manufacturing costs in the unit product cost. Using the formula:

Unit Product Cost = (Total Manufacturing Costs + Selling and Administrative Costs) / Total Units Produced

Unit Product Cost = (($836,000 + $108,000) / 7,000)

Unit Product Cost = $121.14 per unit

Therefore, the absorption costing unit product cost for the month is $132 per unit (rounded to the nearest cent).

A Manufacturing Company That Produces a Single Product Has Provided