Question

A manufacturer reports the following costs to produce 10,000 units in its first year of operations: Direct materials, $10 per unit, Direct labor, $6 per unit, Variable overhead, $70,000, and Fixed overhead, $120,000. The total product cost per unit under absorption costing is

Answer 1

Answer:

Total unitary product cost= $35

Explanation:

The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

Unitary overhead= (120,000 + 70,000) / 10,000) $19

Now, the total product cost:

Total unitary product cost= 10 + 6 + 19

Total unitary product cost= $35