Lily's Pastries produces cupcakes,which sell for $5 each.During the current month,Lily produced 2,800 cupcakes,but only sold 2,700 cupcakes.The variable cost per cupcake was $3 and the sales commission per cupcake was $0.50.Total fixed manufacturing costs were $1,400 and total fixed marketing and administrative costs were $1,200.What is the product cost per cupcake under absorption costing?

Question

Quizplus · Accepted Answer

A)Fixed Manufacturing $1,400 divided by production 2,800 = $ .50 per unit fixed cost
Now: Add Variable cost per unit $3 + fixed $.50 = $3.50 product cost

Lily's Pastries Produces Cupcakes,which Sell for $5 Each