Question

urphy Inc., which produces a single product, has provided the following data for its most recent month of operation:Number of units produced 14,600Variable costs per unit:Direct materials $ 137Direct labor $ 75Variable manufacturing overhead $ 4Variable selling and administrative expenses $ 11Fixed costs:Fixed manufacturing overhead $ 846,800Fixed selling and administrative expenses $ 233,600The company had no beginning or ending inventories.Required:a. Compute the unit product cost under absorption costing.b. Compute the unit product cost under variable costing.

Answer 1

Answer:

Results are below.

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.

The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).

Unit cost under absorption costing:

Unitary product cost= 137 + 75 + 4 + (846,800/14,600)

Unitary product cost= $274

Unit cost under variable costing:

Unitary variable product cost= 137 + 75 + 4

Unitary variable product cost= $216