Santana Company has no beginning and ending inventories, and reports the following information for its only product:Direct materials used $250,000Direct labor $120,000Fixed indirect manufacturing $60,000Variable indirect manufacturing $20,000Variable selling and administrative $50,000Fixed selling and administrative $10,000Units produced and sold 40,000Santana Company uses the absorption approach to prepare the income statement. What is the product cost per unit?

= $11.25

Explanation:

Absorption costing classifies cost into production and non-production cost. Non production costs include selling and administrative cost

Production cost also known as manufacturing cost is the addition of Direct material + Direct labour and Manufacturing overheard

Production cost for Santana Company =

250,000 + 120,000 + 60,000 + 20,000 = $ 450,000.00

Product cost per unit = Total production cost / Number of units

= $450,000 / 40,000 units

= $11.25

Product cost per unit = $11.25