Hardee Inc. , which produces a single product, has provided the following data for its most recent month of operations: There were no beginning or ending inventories. The unit product cost under absorption costing was:
A)$135 per unit
B)$30 per unit
C)$103 per unit
D)$33 per unit

Question

Hardee Inc. , which produces a single product, has provided the following data for its most recent month of operations:  There were no beginning or ending inventories. The unit product cost under absorption costing was:
A)$135 per unit 
B)$30 per unit 
C)$103 per unit 
D)$33 per unit

Quizplus · Accepted Answer

The unit product cost under absorption costing can be calculated as follows:
Direct materials per unit = $15
Direct labor per unit = $20
Variable overhead per unit = $18
Fixed overhead per unit = $50,000 ÷ 5,000 units = $10
Total unit cost = Direct materials + Direct labor + Variable overhead + Fixed overhead
Total unit cost = $15 + $20 + $18 + $10
Total unit cost = $63
Therefore, the unit product cost under absorption costing is $63 per unit.