Question

Hayes Inc. provided the following information for the year 2015:

Beginning inventory 100 units
Units produced 750 units
Units sold 800 units
Selling price $ 150/unit
Direct materials $35/unit
Direct labor $16/unit
Variable manufacturing overhead $15/unit
Fixed manufacturing overhead $24,000/yr
Variable selling/administrative costs $8/unit
Fixed selling/administrative costs $15,500/yr
What is the unit product cost for the year using absorption costing?

Answer 1

Unitary production cost= $98

Step-by-step explanation:

Giving the following information:

Units produced 750 units

Direct materials $35/unit

Direct labor $16/unit

Variable manufacturing overhead $15/unit

Fixed manufacturing overhead $24,000/yr

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.

First, we need to calculate the unitary fixed overhead:

Unitary fixed overhead= 24,000/750= $32

Unitary production cost= 35 + 16 + 15 + 32= $98