Indiana Company incurred the following costs during the past year when planned production and actual production each totaled 20,000 units: $$\begin{array} { l r }
\text { Direct material used } & \$ 280,000 \
\text { Direct labor } & 120,000 \
\text { Variable manufacturing overhead } & 160,000 \
\text { Fixed manufacturing overhead } & 100,000 \
\text { Variable selling and administrative cost } & 60,000 \
\text { Fixed selling and administrative cost } & 90,000
\end{array}$$ Indiana's per-unit inventoriable cost under absorption costing is:

Question

Indiana Company incurred the following costs during the past year when planned production and actual production each totaled 20,000 units: $$\begin{array} { l r } 
\text { Direct material used } & \$ 280,000 \
\text { Direct labor } & 120,000 \
\text { Variable manufacturing overhead } & 160,000 \
\text { Fixed manufacturing overhead } & 100,000 \
\text { Variable selling and administrative cost } & 60,000 \
\text { Fixed selling and administrative cost } & 90,000
\end{array}$$ Indiana's per-unit inventoriable cost under absorption costing is:

Quizplus · Accepted Answer

Under absorption costing, inventoriable costs include direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead. The total inventoriable cost is $280,000 + $120,000 + $160,000 + $100,000 = $660,000. Dividing by 20,000 units gives a per-unit cost of $33.00.

Indiana Company Incurred the Following Costs During the Past Year