Favini Company, which has only one product, has provided the following data concerning its most recent month of operations:
-What is the unit product cost for the month under absorption costing?
A)$91
B)$125
C)$118
D)$98

Question

Favini Company, which has only one product, has provided the following data concerning its most recent month of operations: 
-What is the unit product cost for the month under absorption costing?
A)$91 
B)$125 
C)$118 
D)$98

Quizplus · Accepted Answer

Under absorption costing, the unit product cost includes both direct and indirect manufacturing costs. Total manufacturing costs for the month were $236,000 ($42,000 + $52,000 + $102,000 + $40,000) and total units produced were 2,000. Therefore, the unit product cost is $118 per unit ($236,000 ÷ 2,000 units).

Favini Company, Which Has Only One Product, Has Provided the Following