The production cost of a single unit of a manufactured product is determined by:
A) dividing total direct materials and direct labor for a production run by the number of units made.
B) dividing total direct materials, direct labor, and manufacturing overhead for a production run by the number of units made.
C) dividing total direct materials, direct labor, manufacturing overhead and selling expenses for a production run by the number of units made.
D)dividing the selling price by the gross profit ratio.

Question

Quizplus · Accepted Answer

The production cost of a single unit of a manufactured product is determined by dividing total direct materials, direct labor, and manufacturing overhead for a production run by the number of units made. This is because the direct materials, direct labor, and manufacturing overhead are the main costs associated with producing a product, and including all three in the calculation gives a more accurate representation of the true cost of production. Selling expenses are not typically included in the production cost calculation, as they are not directly related to the manufacturing process. Dividing the selling price by the gross profit ratio is a method used to determine the cost of goods sold, but it does not give the production cost of a single unit.

The Production Cost of a Single Unit of a Manufactured