Question

Sea Company reports the following information regarding its production costs: Units produced 54,000 units Direct labor $ 47 per unit Direct materials $ 40 per unit Variable overhead $ 29 per unit Fixed overhead $ 135,000 in total Compute the product cost per unit under absorption costing.

Answer 1

Answer:

Total unitary cost= $118.5

Explanation:

Giving the following information:

Units produced 54,000 units

Direct labor $47 per unit

Direct materials $40 per unit

Variable overhead $29 per unit

Fixed overhead $ 135,000

Under absorption costing, the unitary production cost is calculated using the direct material, direct labor, and total unitary overhead (including fixed overhead).

Unitary cost= direct material + direct labor + unitary variable overhead + unitary fixed overhead

Unitary fixed overhead= 135,000/54,000= $2.5 per unit

Total unitary cost= 47 + 40 + 29 + 2.5= $118.5