Question

Mullee Corporation produces a single product and has the following cost structure: Number of units produced each year 7,000 Variable costs per unit: Direct materials $ 51 Direct labor $ 12 Variable manufacturing overhead $ 2 Variable selling and administrative expense $ 5 Fixed costs per year: Fixed manufacturing overhead $441,000 Fixed selling and administrative expense $112,000 The absorption costing unit product cost is:________
a. $65 per unit
b. $128 per unit
c. $63 per unit
d. $149 per unit

Answer 1

Answer:

unitary absorption production cost= $128

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.

First, we need to calculate the unitary fixed manufacturing overhead:

Unitary fixed overhead= 441,000 / 7,000= $63

Now, the unitary absorption production cost:

unitary absorption production cost= 51 + 12 + 2 + 63

unitary absorption production cost= $128