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5 September, 11:15

Emerald Pools, Inc. has provided the following information for the year. Units produced 14,000 units Sales price $400 per unit Direct materials $45 per unit Direct labor $20 per unit Variable manufacturing overhead $65 per unit Fixed manufacturing overhead $500,000 per year Variable selling and administration costs $85 per unit Fixed selling and administration costs $270,000 per year What is the unit product cost using absorption costing? (Round any intermediate calculations and your final answer to the nearest dollar.) A. $130 B. $150 C. $65 D. $166

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  1. 5 September, 12:58
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    D. $166

    Explanation:

    The computation of the unit product cost is shown below:

    = Direct material per unit + direct labor per unit + Variable manufacturing overhead per unit + Fixed manufacturing overhead per unit

    = $45 per unit + $20 per unit + $65 per unit + $35.71 per unit

    = 165.71

    The fixed manufacturing overhead per unit is computed by

    = Fixed manufacturing overhead cost : number of units produced

    = $500,000 : 14,000 units

    = $35.71
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