Ross Corporation produces a single product. The company has direct materials costs of $8 per unit, direct labor costs of $6 per unit, and manufacturing overhead of $10 per unit. Sixty percent of the manufacturing overhead is for fixed costs. In addition, variable selling and administrative expenses are $2 per unit, and fixed selling and administrative expenses are $3 per unit at the current activity level. Assume that direct labor is a variable cost. Under absorption costing, the unit product cost is:

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Business

Julissa Hayes

18 June, 13:15

Ross Corporation produces a single product. The company has direct materials costs of $8 per unit, direct labor costs of $6 per unit, and manufacturing overhead of $10 per unit. Sixty percent of the manufacturing overhead is for fixed costs. In addition, variable selling and administrative expenses are $2 per unit, and fixed selling and administrative expenses are $3 per unit at the current activity level. Assume that direct labor is a variable cost. Under absorption costing, the unit product cost is:

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Arabella Meyers · Answer 1

unit cost 24

Explanation:

DM 8

DL 6

MFO 10 (4 variable + 6 fixed)

Absorption unit cost 24

under absorption cost, selling and adminsitrative expense are considered period cost.

They are not capitalized through inventory.