Jarvix Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The company produces the same number of units every month, although the sales in units vary from month to month.The company's variable costs per unit and total fixed costs have been constant from month to month. What is the unit product cost for the month under absorption costing?
A)$90 per unit
B)$74 per unit
C)$81 per unit
D)$83 per unit

Question

Jarvix Corporation, which has only one product, has provided the following data concerning its most recent month of operations:  The company produces the same number of units every month, although the sales in units vary from month to month.The company's variable costs per unit and total fixed costs have been constant from month to month. What is the unit product cost for the month under absorption costing?
A)$90 per unit 
B)$74 per unit 
C)$81 per unit 
D)$83 per unit

Quizplus · Accepted Answer

Under absorption costing, the total manufacturing cost (including both variable and fixed manufacturing costs) is allocated to each unit of product.

Total units produced = 20,000
Total manufacturing cost = $1,620,000 ($1,000,000 + $620,000)

Unit product cost = Total manufacturing cost / Total units produced

Unit product cost = $1,620,000 / 20,000

Unit product cost = $81 per unit

Jarvix Corporation, Which Has Only One Product, Has Provided the Following