Hossack Corporation produces a single product and has the following cost structure: The unit product cost under absorption costing is:
A)$231 per unit
B)$103 per unit
C)$133 per unit
D)$102 per unit

Question

Hossack Corporation produces a single product and has the following cost structure:  The unit product cost under absorption costing is:
A)$231 per unit 
B)$103 per unit 
C)$133 per unit 
D)$102 per unit

Quizplus · Accepted Answer

The unit product cost under absorption costing includes both variable and fixed manufacturing costs, which is calculated as follows:
Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit + (Total fixed manufacturing overhead/Total units produced)
= $18 + $42 + $33 + ($2,520,000/56,000)
= $18 + $42 + $33 + $45
= $138 per unit
Therefore, the unit product cost under absorption costing is $138 per unit, which corresponds to choice C.

Hossack Corporation Produces a Single Product and Has the Following