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10 November, 13:29

MC Qu. 168 A manufacturer reports the following costs to produce ... A manufacturer reports the following costs to produce 23,000 units in its first year of operations: Direct materials, $23 per unit, Direct labor, $19 per unit, Variable overhead, $276,000, and Fixed overhead, $322,000. The total product cost per unit under absorption costing is:

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  1. 10 November, 16:22
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    Unitary product cost = $68

    Explanation:

    Giving the following information:

    23,000 units

    Direct materials = $23 per unit

    Direct labor = $19 per unit

    Variable overhead = $276,000

    Fixed overhead, $322,000

    Under the absorption costing method, the unit product cost is calculated using the direct material, direct labor, and total unitary overhead.

    Fixed unitary overhead = 322,000/23,000 = $14

    Unitary variable overhead = 276,000/23,000 = $12

    Total = $26

    Unitary product cost = 23 + 19 + 26 = $68
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