Question

Caruso Incorporated, which produces a single product, has provided the following data for its most recent month of operations: Number of units produced 4,000 Variable costs per unit: Direct materials $ 39 Direct labor $ 71 Variable manufacturing overhead $ 5 Variable selling and administrative expense $ 8 Fixed costs: Fixed manufacturing overhead $220,000 Fixed selling and administrative expense $308,000 There were no beginning or ending inventories. The unit product cost under absorption costing was:

Answer 1

Answer:

"$170 per unit" is the appropriate response.

Explanation:

The given values are:

Number of units produced

= 4,000

Direct material

= $39

Direct labor

= $71

Variable manufacturing overhead

= $5

Now,

The fixed manufacturing overhead will be:

=  $\frac{220,000}{Units \ produced}$

=  $\frac{220,000}{4000}$

=  $55 \ per \ unit$ ($)

Hence,

The unit product cost under absorption costing will be:

=  $Direct \ materials + Direct \ labor + Variable \ manufacturing \ overhead + Fixed \ manufacturing$On substituting the above values, we get

=  $39+71+5+55$

=  $170 \ per \ unit$ ($)