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 unit product cost is calculated as follows:

Unit product cost = (Total variable costs per unit + Total fixed costs per unit)/Number of units produced

In the given data:
- Total variable costs per unit = Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit = $12 + $28 + $8 = $48 per unit
- Total fixed costs = Fixed manufacturing overhead = $480,000
- Number of units produced = 10,000 units

Unit product cost = ($48 + $480,000/10,000) = $81 per unit

Therefore, the correct answer is C) $81 per unit.

Jarvix Corporation,which Has Only One Product,has Provided the Following Data