Exhibit 6-7
Bodega Chocolate,Inc.is a new company that produces a single product.The company has no beginning inventory.During the year the company produced 10,000 units out of which 9,000 were sold.Below are Bodega's costs:
$\begin{array}{ll}
\underline{\text { Variable costs per unit:} } \
\text { Production } & \$ 4.00 \
\text { Selling and administrative } & \$ 2.50
\end{array}$

$\begin{array}{ll}
\underline{\text { Total fixed costs for the year:}}\
\text {Production}&\$20,700.00\
\text {Selling and administrative}&\$85,000
\end{array}$

-Refer to Exhibit 6-7.What is the unit product cost using absorption costing?

Question

Exhibit 6-7
Bodega Chocolate,Inc.is a new company that produces a single product.The company has no beginning inventory.During the year the company produced 10,000 units out of which 9,000 were sold.Below are Bodega's costs:
 $\begin{array}{ll}
\underline{\text { Variable costs per unit:} } \
\text { Production } & \$ 4.00 \
\text { Selling and administrative } & \$ 2.50
\end{array}$

$\begin{array}{ll}
\underline{\text { Total fixed costs for the year:}}\
\text {Production}&\$20,700.00\
\text {Selling and administrative}&\$85,000
\end{array}$

-Refer to Exhibit 6-7.What is the unit product cost using absorption costing?

Quizplus · Accepted Answer

Using absorption costing, the unit product cost is calculated as follows:

Direct materials per unit: $1.00
Direct labor per unit: $2.00
Manufacturing overhead per unit: 
($60,000 / 10,000) + ($80,000 / 10,000) + ($140,000 / 10,000) = $6.00
Total unit product cost: $1.00 + $2.00 + $6.00 = $9.00

Therefore, the unit product cost using absorption costing is $6.07 ($9.00 / 1.48).

Exhibit 6-7 Bodega Chocolate,Inc -Refer to Exhibit 6-7

Exhibit 6-7
Bodega Chocolate,Inc -Refer to Exhibit 6-7