Zeklen Company had the following data for the month: Variable costs per unit: Direct materials $6.00 Direct labor 2.00 Variable overhead 1.00 Variable selling expenses 0.60 Fixed overhead is $2,000 per month; it is applied to production based on normal activity of 1,000 units. During the month, 3,000 units were produced. Zeklen started the month with 200 units in beginning inventory, with unit product cost equal to this month's unit product cost. A total of 1,200 units were sold during the month at a price of $10. Selling and administrative expense for the month, all fixed, totaled $2,400. What is the unit product cost under absorption costing? a.$10 b.$4 c.$7 d.$12 e.$11

Question

Business

Bronson Krueger

13 April, 13:34

Zeklen Company had the following data for the month: Variable costs per unit: Direct materials $6.00 Direct labor 2.00 Variable overhead 1.00 Variable selling expenses 0.60 Fixed overhead is $2,000 per month; it is applied to production based on normal activity of 1,000 units. During the month, 3,000 units were produced. Zeklen started the month with 200 units in beginning inventory, with unit product cost equal to this month's unit product cost. A total of 1,200 units were sold during the month at a price of $10. Selling and administrative expense for the month, all fixed, totaled $2,400. What is the unit product cost under absorption costing? a.$10 b.$4 c.$7 d.$12 e.$11

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Answers (1)

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Alisson Chaney · Answer 1

The correct answer is E: $11

Explanation:

Giving the following information:

Variable costs per unit:

Direct materials $6.00

Direct labor 2.00

Variable overhead 1.00

Fixed overhead is $2,000 per month; it is applied to production based on normal activity of 1,000 units.

Unitary fixed overhead = 2000/1000 = 2

Total unitary cost under absorption costing = direct material + direct labor + varibale MOH + fixed MOH = 6 + 2 + 1 + 2 = $11