Question

Sea Company reports the following information regarding its production costs:

Units produced 42,000 units
Direct labor $35 per unit
Direct materials $28 per unit
Variable overhead $17 per unit
Fixed overhead $105,000 in total


Compute the product cost per unit under absorption costing.

a. $28.00
b. $82.50
c. $80.00
d. $63.00
e. $35.00

Answer 1

Answer:

b. $82.50

Explanation:

The computation of the product cost per unit under absorption costing is shown below:

= Direct labor + Direct materials + variable overhead per unit + (Total fixed overhead ÷ Units produced)

= $35 + $28 + $17 + ($105,000 ÷ 42,000)

= $35 + $28 + $17 + $2.5

= $82.50 per unit

Hence, the product cost per unit under absorption costing is $82.50 per unit

Therefore the correct option is b. $82.50