Question

Comfy Cozy Chairs makes and sells rockers. Each rocker requires $45 of direct materials and $37 of direct labor. Variable manufacturing overhead is $8 per unit, and fixed manufacturing overhead totals $58,000. Variable selling and administrative costs equal $15 per unit, and fixed selling and administrative costs total $102,000. During the period, 2,000 rockers were produced and 1,640 were sold. The unit product cost using absorption costing is ______. Multiple choice question. $105 $119 $90 $125

Answer 1

Unitary production cost= $119

Step-by-step 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.

Unitary fixed overhead= 58,000 / 2,000= $29 per unit

Now, the unitary absorption cost per unit:

Unitary production cost= 45 + 37 + 8 + 29

Unitary production cost= $119