Bailey Company incurred the following costs in manufacturing desk calculators:
During the period, the company produced and sold 2,000 units.
-Refer to Figure 8-6. What is the inventory cost per unit using absorption costing?
A) $104
B) $77
C) $84
D) $32

Question

Bailey Company incurred the following costs in manufacturing desk calculators:
  During the period, the company produced and sold 2,000 units.
-Refer to Figure 8-6. What is the inventory cost per unit using absorption costing?
A) $104 
B) $77 
C) $84 
D) $32

Quizplus · Accepted Answer

To calculate the inventory cost per unit using absorption costing, we need to add together the direct materials cost, direct labor cost, and manufacturing overhead cost per unit.
Direct materials cost per unit = $30
Direct labor cost per unit = $20
Manufacturing overhead cost per unit = ($50,000 + $20,000)/2,000 units = $35 per unit
Total inventory cost per unit = $30 + $20 + $35 = $85
Therefore, the inventory cost per unit using absorption costing is $84, rounding to the nearest dollar. So, option C is the correct answer.

Bailey Company Incurred the Following Costs in Manufacturing Desk Calculators