Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: What is the unit product cost for the month under absorption costing?
A) $32 per unit
B) $61 per unit
C) $37 per unit
D) $66 per unit

Question

Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations:  What is the unit product cost for the month under absorption costing?
A) $32 per unit 
B) $61 per unit 
C) $37 per unit 
D) $66 per unit

Quizplus · Accepted Answer

Unit product cost under absorption costing = (Total manufacturing costs + Total variable selling and administrative expenses)/Number of units produced
 
Total manufacturing costs = Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead absorbed
 
Total manufacturing costs = $150,000 + $90,000 + $20,000 + $75,000 = $335,000
 
Unit product cost = ($335,000 + $25,000)/5,500 = $61 per unit

Farris Corporation, Which Has Only One Product, Has Provided the Following