Kasawaki Company incurred the following costs in manufacturing digital cameras: $\begin{array}{lr}
\text { Direct materials } & \$ 14 \
\text { Indirect materials (variable) } & 4 \
\text { Direct labor } & 8 \
\text { Indirect labor (variable) } & 6 \
\text { Other variable factory overhead } & 10 \
\text { Fixed factory overhead } & 28 \
\text { Variable selling expenses } & 20 \
\text { Fixed selling expenses } & 14
\end{array}$
During the period, the company produced and sold 1,000 units.
What is the inventory cost per unit using absorption costing?

Question

Quizplus · Accepted Answer

Absorption costing includes all manufacturing costs, both variable and fixed, in the cost of a product. The calculation for the inventory cost per unit is: Direct materials ($14) + Direct labor ($8) + Variable manufacturing overhead (Indirect materials $4 + Indirect labor $6 + Other variable factory overhead $10) + Fixed factory overhead ($28) = $70 per unit. Selling expenses are not included in product cost under absorption costing.

Kasawaki Company Incurred the Following Costs in Manufacturing Digital Cameras