Which of the following statements is correct? In order to calculate a total production cost per unit, production overhead absorbed by each unit is added to:

Question

Quizplus · Accepted Answer

To calculate the total production cost per unit, we need to add the production overhead absorbed by each unit to the direct costs per unit which includes materials, labor, and other direct expenses directly related to the production of each unit. Adding selling and administration costs would not be relevant as they are not directly related to the production of each unit. Similarly, factory cost per unit includes direct expenses and production overhead, so adding production overhead absorbed by each unit to factory cost per unit would result in duplicating the production overhead cost. Therefore, the correct option is D.

Which of the Following Statements Is Correct? in Order to Calculate