Sea Company reports the following information regarding its production costs: Units produced 54,000 units Direct labor $ 47 per unit Direct materials $ 40 per unit Variable overhead $ 29 per unit Fixed overhead $ 135,000 in total Compute the product cost per unit under absorption costing.

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Business

Ayden

3 May, 18:16

Sea Company reports the following information regarding its production costs: Units produced 54,000 units Direct labor $ 47 per unit Direct materials $ 40 per unit Variable overhead $ 29 per unit Fixed overhead $ 135,000 in total Compute the product cost per unit under absorption costing.

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Amara Ball · Answer 1

Total unitary cost = $118.5

Explanation:

Giving the following information:

Units produced 54,000 units

Direct labor $47 per unit

Direct materials $40 per unit

Variable overhead $29 per unit

Fixed overhead $ 135,000

Under absorption costing, the unitary production cost is calculated using the direct material, direct labor, and total unitary overhead (including fixed overhead).

Unitary cost = direct material + direct labor + unitary variable overhead + unitary fixed overhead

Unitary fixed overhead = 135,000/54,000 = $2.5 per unit

Total unitary cost = 47 + 40 + 29 + 2.5 = $118.5