Answer:
Hence, the unit product cost using absorption costing is $318
Explanation:
For computing the unit product cost, the following things is need to be considered.
1. Direct material = Production units × per unit material price
= 3,500 × $70
=$245,000
2. Direct labor = Production units × per unit labor price
= 3,500 × $55
= $192,500
3. Variable manufacturing overhead = Production units × per unit variable manufacturing price
= 3,500 × 20
= 70,000
4. Fixed manufacturing overhead = $350,000
6. Variable selling and administrative cost = Production units × per unit varaible selling price
= 3,500 × 30
= $105,000
7. Fixed selling and administrative costs = $150,000
Now add these all items and divide by number of units.
So, total cost is equal to
= $245,000 + $192,500 + $70,000 + $350,000 + $105,000 + $150,000
= $1,112,500
And, units produced is = 3,500 units
So, unit product cost = Total cost ÷ units produced
= $1,112,500 ÷ 3,500
= $318
Hence, the unit product cost using absorption costing is $318
