Assume that the company uses an absorption costing system that assigns $16 of direct labor cost and $70 of fixed manufacturing overhead to each unit that is produced. The unit product cost under this costing system is:
A)$88 per unit
B)$213 per unit
C)$174 per unit
D)$104 per unit

Question

Quizplus · Accepted Answer

The unit product cost is calculated as follows:
Direct materials cost per unit = $60
Direct labor cost per unit = $16
Manufacturing overhead cost per unit = $70
Total unit product cost = Direct materials cost per unit + Direct labor cost per unit + Manufacturing overhead cost per unit
Total unit product cost = $60 + $16 + $70 = $146
Therefore, the correct option is C, i.e., $174 per unit.

Assume That the Company Uses an Absorption Costing System That