Question

Murphy Inc., which produces a single product, has provided the following data for its most recent month of operation: Number of units produced 16,900 Variable costs per unit: Direct materials $ 109 Direct labor $ 77 Variable manufacturing overhead $ 9 Variable selling and administrative expenses $ 12 Fixed costs: Fixed manufacturing overhead $ 997,100 Fixed selling and administrative expenses $ 388,700 The 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

Instructions are listed below.

Step-by-step explanation:

Giving the following information:

Number of units produced 16,900

Variable costs per unit:

Direct materials $ 109

Direct labor $ 77

Variable manufacturing overhead $ 9

Variable selling and administrative expenses $ 12

Fixed costs:

Fixed manufacturing overhead $ 997,100

Fixed selling and administrative expenses $ 388,700

A) Absorption costing:

Direct materials $ 109

Direct labor $ 77

Variable manufacturing overhead $ 9

Fixed manufacturing overhead (997,100/16,900)= 59

Unitary cost= $254

B) Variable costing:

Direct materials $ 109

Direct labor $ 77

Variable manufacturing overhead $ 9

Unitary cost= $195