B & B Manufacturing
B & B Manufacturing produces a single product. Last year, the company produced 10 000 units out of which 9500 were sold. There were no units in beginning inventory. The company had the following costs:
$\begin{array}{cr}
\underline{\text { Variable costs per unit: }}\
\text { Production } & \$ 6.00 \
\text { Selling and administrative } & \$ 2.00 \
\underline{\text { Fixed costs (total):} } & \
\text { Production } & \$ 15000 \
\text { Selling and administrative } &\$ 10000
\end{array}$
-What is the unit product cost using absorption costing?

Question

B & B Manufacturing
B & B Manufacturing produces a single product. Last year, the company produced 10 000 units out of which 9500 were sold. There were no units in beginning inventory. The company had the following costs:
$\begin{array}{cr}
\underline{\text { Variable costs per unit: }}\
\text { Production } & \$ 6.00 \
\text { Selling and administrative } & \$ 2.00 \
\underline{\text { Fixed costs (total):} } & \
 \text { Production } & \$ 15000 \
\text { Selling and administrative } &\$ 10000 
\end{array}$ 
-What is the unit product cost using absorption costing?

Quizplus · Accepted Answer

Absorption costing considers all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) when calculating unit product cost. Based on the information provided in the question, the unit product cost using absorption costing would be:

Direct materials: $1.50 + Direct labor: $2.00 + Variable manufacturing overhead: $1.00 + Fixed manufacturing overhead (total of $1,500 divided by 1,000 units): $2.00 = $7.50 per unit. Therefore, choice C is the correct answer.

B & B Manufacturing B & B Manufacturing Produces a Single

B & B Manufacturing
B & B Manufacturing Produces a Single