Asked by Fateh Singh on Jun 28, 2024
Verified
The unit product cost under absorption costing in Year 1 is closest to:
A) $38.00
B) $32.00
C) $23.00
D) $9.00
Absorption Costing
An accounting method that includes all manufacturing costs, both variable and fixed, in the cost of a product, and is used for external reporting purposes.
Unit Product Cost
The total cost associated with manufacturing one unit of a product, including labor, materials, and overhead expenses.
Year 1
A term typically used to refer to the first year of operation, accounting period, or investment.
- Estimate the cost per unit in accordance with variable and absorption costing strategies.
Verified Answer
Therefore, the manufacturing overhead cost per unit is $24.00 ($240,000 ÷ 10,000 units).
Adding this to the sum of direct materials and direct labor per unit ($8 + $0), the unit product cost under absorption costing in Year 1 is $32.00.
Learning Objectives
- Estimate the cost per unit in accordance with variable and absorption costing strategies.
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