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4 years ago

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Lily's Pastries produces cupcakes, which sell for $5.10 each. During the current month, Lily produced 3200 cupcakes, but only so

ld 2700 cupcakes. The variable cost per cupcake was $3.40 and the sales commission per cupcake was $0.50. Total fixed manufacturing costs were $1700 and total fixed marketing and administrative costs were $900. What is the product cost per cupcake under absorption costing?

2 answers:

shtirl [24]4 years ago

7 0

Answer:

Unitary cost= $3.92

Explanation:

Giving the following information:

Lily produced 3200 cupcakes.

The variable cost per cupcake was $3.40.

Total fixed manufacturing costs were $1700

<u>Under the absorption costing method, the unitary product cost is calculated using the variable cost and the fixed manufacturing costs.</u>

Unitary cost= unitary variable cost + unitary fixed overhead

Unitary cost= 3.4 + 1,700/3,200= $3.92

Dovator [93]4 years ago

6 0

Answer: $3.93

Explanation:

Given the following

Variable cost per unit = $3.40

Fixed manufacturing cost = $1700

Total Units produced=3200

Uaing absorption costing which incorporates the cost of fixed manufacturing cost of goods in the unit price of goods.

Absorption costing per unit = Variable cost per unit + fixed cost per unit

Variable cost per unit = $3.40

Fixed cost per unit = (Total manufacturing cost ÷ Total unit produced)

Fixed cost per unit = $1700 ÷ 3200 = $0.53

Absorption costing per unit = $3.40 + $0.53 = $3.93

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