Question

Dorglass Incorporated reported the following information about the production and sale of its only product during the first month of operations: Selling price per unit $225 Sales $360,000 Direct materials used $176,000 Direct labor $100,000 Variable factory overhead $44,000 Fixed factory overhead $80,000 Variable selling and administrative expenses $20,000 Fixed selling and administrative expenses $10,000 Ending inventory, Direct Materials 0 Ending inventory, Work-in-process 0 Ending inventory, Finished Goods 400 units Under Variable Costing, the Product (Inventoriable) Cost per unit is ________. A. $225 B. $160 C. $200 D. $170

Answer 1

B. $160

Step-by-step explanation:

For computing the product cost per unit first we have to find out the total number of units which is

= $360,000 ÷ $225 + 400 units

= 1,600 units + 400 units

= 2,000 units

Now the product cost per unit is

= (Direct material used + direct labor + variable factory overhead) ÷ ( total units)

= ($176,000 + $100,000 + $44,000) ÷ (2,000 units)

= ($320,000) ÷ (2,000 units)

= $160