Moskowitz Corporation has provided the following data for its two most recent years of operation: The unit product cost under absorption costing in Year 2 is closest to:
A) $77.00
B) $48.00
C) $23.00
D) $71.00

Question

Moskowitz Corporation has provided the following data for its two most recent years of operation:  The unit product cost under absorption costing in Year 2 is closest to:
A) $77.00 
B) $48.00 
C) $23.00 
D) $71.00

Quizplus · Accepted Answer

To calculate the unit product cost under absorption costing, we need to calculate the total cost per unit by dividing the total cost by the number of units produced.

Under absorption costing, total cost includes direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead.

In Year 2, total cost is $2,470,000 + $560,000 + $1,680,000 + $4,800,000 = $9,510,000

Number of units produced is 90,000

Therefore, the unit product cost under absorption costing in Year 2 is $9,510,000 / 90,000 = $71.00.

Therefore the answer is D.

Moskowitz Corporation Has Provided the Following Data for Its Two