Question

Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 44,000 units and sold 36,000 units at a price of $140 per unit. Manufacturing costs Direct materials per unit $ 60 Direct labor per unit $ 22 Variable overhead per unit $ 8 Fixed overhead for the year $ 528,000 Selling and administrative costs Variable selling and administrative cost per unit $ 11 Fixed selling and administrative cost per year $ 105,000 Exercise 06-9 Part 1a 1a. Assume the company uses absorption costing. Determine its product cost per unit.

Answer 1

Answer:

$102

Explanation:

Given that,

Direct materials per unit = $60

Direct labor per unit = $22

Variable overhead per unit = $8

Fixed overhead for the year = $528,000

Units produced = 44,000

Fixed overhead = Fixed overhead for the year ÷ Number of units produced

                          = $528,000 ÷ 44,000

                          = $12 per unit

Total product cost per unit under absorption costing:

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

= $60 + $22 + $8 + $12

= $102