Veronica's Clothing Manufacturers supplies the following information. Direct materials cost is $3.00 per unit; direct labour is $4.50 per unit. Variable overhead is $1.50 per unit; fixed overhead is $2.00 per unit. Secretarial salaries are $7.00 per unit and advertising amounts to $4.00 per unit. What is the total manufacturing cost per unit under absorption costing?

Question

Quizplus · Accepted Answer

Total manufacturing cost per unit is the sum of direct materials cost, direct labor cost, variable overhead cost, and fixed overhead cost per unit. 
Total manufacturing cost per unit = $3.00 + $4.50 + $1.50 + $2.00 = $11.00. 
Since absorption costing includes both variable and fixed overhead costs, we need to add the secretarial salaries and advertising amounts as well. 
Total manufacturing cost per unit under absorption costing = $11.00 + $7.00 + $4.00 = $22.00.

Veronica's Clothing Manufacturers Supplies the Following Information