Given the following data, calculate product cost per unit under absorption costing. $$\begin{array} { | l | c | }
\hline \text { Direct labor } & \$ 7 \text { per urit } \
\hline \text { Direct rmaterials } & \$ 1 \text { per urit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 20,000 \
\hline \text { Total fixed overhead } & \$ 90,000 \
\hline & \
\hline \text { Expected urits to be produced } & 40,000 \text { urits } \
\hline
\end{array}$$
A)$8 per unit
B)$8.50 per unit
C)$10.25 per unit
D)$10.75 per unit
E)$12 per unit

Question

Given the following data, calculate product cost per unit under absorption costing. $$\begin{array} { | l | c | } 
\hline \text { Direct labor } & \$ 7 \text { per urit } \
\hline \text { Direct rmaterials } & \$ 1 \text { per urit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 20,000 \
\hline \text { Total fixed overhead } & \$ 90,000 \
\hline & \
\hline \text { Expected urits to be produced } & 40,000 \text { urits } \
\hline
\end{array}$$
A)$8 per unit
B)$8.50 per unit
C)$10.25 per unit
D)$10.75 per unit
E)$12 per unit

Quizplus · Accepted Answer

Under absorption costing, product cost per unit includes direct materials, direct labor, and both variable and fixed manufacturing overhead.

Total manufacturing overhead = Total variable overhead + Total fixed overhead
Total manufacturing overhead = $20,000 + $90,000
Total manufacturing overhead = $110,000

Product cost per unit = Direct materials + Direct labor + Manufacturing overhead per unit
Product cost per unit = $1 + $7 + ($110,000/40,000)
Product cost per unit = $1 + $7 + $2.75
Product cost per unit = $10.75

Therefore, the product cost per unit under absorption costing is $10.75 per unit. The answer is option D ($10.75 per unit).

Given the Following Data, Calculate Product Cost Per Unit Under