Andrew Company provided the following information regarding its one and only product -skateboards. $$\begin{array} { l l }
\text { Direct materials used } & \$ 350,000 \
\text { Direct labor } & 170,000 \
\text { Fixed overhead } & 80,000 \
\text { Variable overhead } & 20,000 \
\text { Variable selling and administrative } & 90,000 \
\text { Units produced and sold } & 40,000
\end{array}$$ The manufacturing cost per unit by using the absorption approach is:
A) $14.75
B) $13.50
C) $15.50
D) $13.00

Question

Andrew Company provided the following information regarding its one and only product -skateboards. $$\begin{array} { l l } 
\text { Direct materials used } & \$ 350,000 \
\text { Direct labor } & 170,000 \
\text { Fixed overhead } & 80,000 \
\text { Variable overhead } & 20,000 \
\text { Variable selling and administrative } & 90,000 \
\text { Units produced and sold } & 40,000
\end{array}$$ The manufacturing cost per unit by using the absorption approach is:
A) $14.75
B) $13.50
C) $15.50
D) $13.00

Quizplus · Accepted Answer

The absorption approach includes all manufacturing costs: Direct materials ($350,000), Direct labor ($170,000), Fixed overhead ($80,000), and Variable overhead ($20,000). Total manufacturing costs = $620,000. Dividing by 40,000 units gives $15.50 per unit.

Andrew Company Provided the Following Information Regarding Its One and Only