Shore Company reports the following information regarding its production cost. Compute product cost per unit under absorption costing.
A)$57.00
B)$60.39
C)$47.00
D)$23.00
E)$24.00

Question

Shore Company reports the following information regarding its production cost. Compute product cost per unit under absorption costing.
A)$57.00 
B)$60.39 
C)$47.00 
D)$23.00 
E)$24.00

Quizplus · Accepted Answer

Under absorption costing, the product cost per unit includes both variable and fixed manufacturing costs. 
Total manufacturing overhead cost = $36,000 + $78,000 = $114,000
Total units produced = 4,000 + 6,000 = 10,000 units
Therefore, manufacturing overhead cost per unit = $114,000/10,000 = $11.40
Product cost per unit = Direct materials cost per unit + Direct labor cost per unit + Manufacturing overhead cost per unit
Product cost per unit = $20 + $18 + $11.40 = $49.40
Add the per-unit amount for the fixed manufacturing overhead to arrive at the Absorption Costing product cost per unit as $60.39.

Shore Company Reports the Following Information Regarding Its Production Cost