Given the following data,total product cost per unit under absorption costing is $11.40.
$\begin{array}{|l|c|}
\hline \text { Direct labor } & \$ 5 \text { per unit } \
\hline \text { Direct materials } & \$ 6 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 32,800 \
\hline \text { Total fixed overhead } & \$ 164,000 \
\hline & \
\hline \text { Expected units to be produced } & 82,000 \text { units } \
\hline
\end{array}$

Question

Given the following data,total product cost per unit under absorption costing is $11.40.
 $\begin{array}{|l|c|}
\hline \text { Direct labor } & \$ 5 \text { per unit } \
\hline \text { Direct materials } & \$ 6 \text { per unit } \
\hline \text { Overhead } & \
\hline \text { Total variable overhead } & \$ 32,800 \
\hline \text { Total fixed overhead } & \$ 164,000 \
\hline & \
\hline \text { Expected units to be produced } & 82,000 \text { units } \
\hline
\end{array}$

Quizplus · Accepted Answer

Under absorption costing, total product cost per unit includes direct labor, direct materials, variable overhead per unit, and fixed overhead per unit. The fixed overhead per unit is $164,000 / 82,000 = $2. The variable overhead per unit is $32,800 / 82,000 = $0.40. Therefore, the total cost per unit is $5 + $6 + $0.40 + $2 = $13.40, not $11.40.

Given the Following Data,total Product Cost Per Unit Under Absorption