Question

Seahorse Incorporated, which only has one product, has provided the following data concerning its most recent month of operations. Description Amount Selling Price $120 Units in beginning inventory 0 Units produced 1,900 Units sold 1,300 Units in ending inventory 600 Variable Costs Per unit Direct materials $42 Direct labor $31 Variable manufacturing overhead $11 Variable selling and administrative expense $9 Fixed Costs Per month Fixed manufacturing overhead $43,700 Fixed selling and administrative expense $35,000 Question Select Your Answer Question 1: What is the unit product cost for the month under absorption costing

Answer 1

Unit product cost = $107

Step-by-step explanation:

Absorption costing is a method of costing where production units and inventories are value at the full cost per unit. Here, fixed overheads are charged to all units produced using an overhead absorption rate

The full cost per unit = D.mat cost + D.labour cost + Variable overheads+ Fixed overheads

Fixed production overhead cost per unit

=Fixed manufacturing overhead/units produced

= $43,700/ 1,900 Units

=$23 per unit

Full cost per unit

= $42 + $31 + $11 + 23

= $107