Erie Company manufactures a single product. Assume the following data for the year just completed:

There were no units in inventory at the beginning of the year. During the year, 30,000 units were produced and 25,000 units were sold. Each unit sells for $35.
-Under absorption costing,what was the unit product cost?
A) $8.00.
B) $10.75.
C) $13.00
D) $17.75.

Question

Erie Company manufactures a single product. Assume the following data for the year just completed:

There were no units in inventory at the beginning of the year. During the year, 30,000 units were produced and 25,000 units were sold. Each unit sells for $35.
-Under absorption costing,what was the unit product cost?
A) $8.00. 
B) $10.75. 
C) $13.00 
D) $17.75.

Quizplus · Accepted Answer

Under absorption costing, the unit product cost includes both direct and indirect manufacturing costs. The total manufacturing cost for the year is $322,500 ($150,000 in variable manufacturing costs + $172,500 in fixed manufacturing costs). The unit product cost is calculated by dividing the total manufacturing cost by the number of units produced:
Unit product cost = Total manufacturing cost / Number of units produced
Unit product cost = $322,500 / 30,000 = $10.75 per unit.

Erie Company Manufactures a Single Product