Emerald Pools, Inc. has provided the following information for the year. Units produced 14,000 units Sales price $400 per unit Direct materials $45 per unit Direct labor $20 per unit Variable manufacturing overhead $65 per unit Fixed manufacturing overhead $500,000 per year Variable selling and administration costs $85 per unit Fixed selling and administration costs $270,000 per year What is the unit product cost using absorption costing? (Round any intermediate calculations and your final answer to the nearest dollar.) A. $130 B. $150 C. $65 D. $166

Question

Business

Kenneth Simpson

2 October, 11:24

Emerald Pools, Inc. has provided the following information for the year. Units produced 14,000 units Sales price $400 per unit Direct materials $45 per unit Direct labor $20 per unit Variable manufacturing overhead $65 per unit Fixed manufacturing overhead $500,000 per year Variable selling and administration costs $85 per unit Fixed selling and administration costs $270,000 per year What is the unit product cost using absorption costing? (Round any intermediate calculations and your final answer to the nearest dollar.) A. $130 B. $150 C. $65 D. $166

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Answers (1)

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America Miller · Answer 1

D. $166

Explanation:

The computation of the unit product cost is shown below:

= Direct material per unit + direct labor per unit + Variable manufacturing overhead per unit + Fixed manufacturing overhead per unit

= $45 per unit + $20 per unit + $65 per unit + $35.71 per unit

= 165.71

The fixed manufacturing overhead per unit is computed by

= Fixed manufacturing overhead cost : number of units produced

= $500,000 : 14,000 units

= $35.71