Question

Sea Company reports the following information regarding its production costs:

Units produced 46,000 units
Direct labor $39 per unit
Direct materials $32 per unit
Variable overhead $21 per unit
Fixed overhead $115,000 in total

Compute the product cost per unit under absorption costing.
(A) $32.00
(B) $94.50
(C) $92.00
(D) $71.00
(E) $39.00

Answer 1

correct option is (B) $94.50

Step-by-step explanation:

given data

Units produced = 46,000 units

Direct labor = $39 per unit

Direct materials = $32 per unit

Variable overhead = $21 per unit

Fixed overhead = $115,000

to find out

product cost per unit under absorption costing

solution

we find Fixed overhead that is

fixed overhead =
`(115000)/(46000)`

fixed overhead = 2.5

so

total cost that is

total cost = Direct labor + Direct materials + Variable overhead + Fixed overhead

product cost = $39 + $32 + $21 + $2.5

product cost = $94.50

so correct option is (B) $94.50