Fast Track Auto produces and sells an auto part for $85 per unit. In 2017, 110,000 parts were produced and 90,000 units were sold. Other information for the year includes:

What is the inventoriable cost per unit using absorption costing?
A) $30.00
B) $36.00
C) $37.18
D) $40.00

Question

Fast Track Auto produces and sells an auto part for $85 per unit. In 2017, 110,000 parts were produced and 90,000 units were sold. Other information for the year includes:

What is the inventoriable cost per unit using absorption costing?
A) $30.00 
B) $36.00 
C) $37.18 
D) $40.00

Quizplus · Accepted Answer

Absorption costing considers all variable manufacturing costs and all fixed manufacturing costs as inventoriable costs. Therefore, in this case, direct materials, direct manufacturing labor, variable manufacturing costs, and fixed manufacturing costs will be considered as inventoriable cost. The total inventoriable cost is $37.18 ($23 + $6 + $1 + $7.18*).
* $790,000/110,000= $7.18 per unit

Fast Track Auto Produces and Sells an Auto Part for $85