Sproull Inc., which produces a single product, has provided the following data f

Question

Sproull Inc., which produces a single product, has provided the following data for its most recent month of operation: Number of units produced Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expenses 10,900 $ 104 4 $ 643,100 $ 185,300 The company had no beginning or ending inventories. Required: a. Compute the unit product cost under absorption costing Unit product cost Absorption costing b. Compute the unit product cost under variable costing. Unit product cost Variable costing

Explanation / Answer

Ans.a Unit product cost under Absorption Costing     =      $244 Particulars Amount Direct materials 104 Direct labor 77 Variable manufacturing overhead 4 Fixed manufacturing overhead 59 Total 244 *Fixed manufacturing overhead per unit = Fixed manufacturing overhead / NO. of units produced 643100 / 10900 $59 per unit Ans.b Unit product cost under Variable Costing     =      $185 Particulars Amount Direct materials 104 Direct labor 77 Variable manufacturing overhead 4 Total 185 *In absorption costing all manufacturing costs (variable + fixed) are added, whereas in variable costing only variable manufacturing costs are added in the calculation of unit product cost.

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