Question

Shore Company reports the following information regarding its production cost.

Units produced 48,000 units
Direct labor $ 43 per unit
Direct materials $ 44 per unit
Variable overhead $ 10 per unit
Fixed overhead $ 114,920 in total

Compute product cost per unit under absorption costing.

Answer 1

To compute the product cost per unit under absorption costing for Shore Company, sum the direct labor, direct materials, variable overhead, and allocated fixed overhead per unit. The total product cost per unit is calculated to be $99.39.

Step-by-step explanation:

To compute the product cost per unit under absorption costing for Shore Company, you would add together the direct labor, direct materials, variable overhead, and a portion of the fixed overhead allocated per unit. The formula for calculating the product cost per unit is:

Total Product Cost Per Unit = Direct Labor + Direct Materials + Variable Overhead + (Fixed Overhead / Units Produced)

Using the provided information, we have:

• Direct Labor: $43 per unit
• Direct Materials: $44 per unit
• Variable Overhead: $10 per unit
• Fixed Overhead: $114,920 in total
• Units Produced: 48,000 units

To calculate the fixed overhead per unit:

Fixed Overhead Per Unit = $114,920 / 48,000 units = $2.39 per unit

Adding all these costs together:

Total Product Cost Per Unit = $43 + $44 + $10 + $2.39 = $99.39

Therefore, the product cost per unit under absorption costing for Shore Company is $99.39.

Answer 2

The product cost per unit under absorption costing is $108.40.

Step-by-step explanation:

To compute the product cost per unit under absorption costing, we need to consider both the variable and fixed production costs. The absorption costing formula is:

Product Cost per Unit = (Direct Labor + Direct Materials + Variable Overhead + Fixed Overhead) / Units Produced

Using the given information and plugging in the values:

Product Cost per Unit = ($43 + $44 + $10 + $114,920) / 48,000 units

Product Cost per Unit = $108.40