Romano Corporation has computed the following unit costs for the year just ended: Under absorption costing, each unit of the company's inventory would be carried at:
A)$49.
B)$54.
C)$72.
D)$104.
E)None of the answers is correct.

Question

Romano Corporation has computed the following unit costs for the year just ended:  Under absorption costing, each unit of the company's inventory would be carried at:
A)$49. 
B)$54. 
C)$72. 
D)$104. 
E)None of the answers is correct.

Quizplus · Accepted Answer

Under absorption costing, inventory is carried at the full cost per unit, which includes both variable and fixed manufacturing costs. Therefore, the unit cost of $72 (direct materials + direct labor + variable overhead + fixed overhead) would be carried in inventory.

Romano Corporation Has Computed the Following Unit Costs for the Year