Mentor Corp. has provided the following information for the current year: Calculate the unit product cost using absorption costing.
A) $245
B) $275
C) $55
D) $145

Question

Mentor Corp. has provided the following information for the current year:  Calculate the unit product cost using absorption costing.
A) $245 
B) $275 
C) $55 
D) $145

Quizplus · Accepted Answer

To calculate the unit product cost using absorption costing, we need to add up all the manufacturing costs (direct materials, direct labor, and manufacturing overhead) and divide it by the number of units produced. Using the information given, the total manufacturing cost is $693,000 (direct materials of $110,000 + direct labor of $440,000 + manufacturing overhead of $143,000). The number of units produced is 2,820 units. Therefore, the unit product cost is $245 ($693,000/2,820 units).