Khanam Corporation, which has only one product, has provided the following data

Question

Khanam Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price   $107
Units in beginning inventory   0
Units produced   6,400
Units sold   6,100
Units in ending inventory   300
Variable costs per unit:     
Direct materials   $14
Direct labor   $44
Variable manufacturing overhead   $8
Variable selling and administrative   $8
Fixed costs:     
Fixed manufacturing overhead   $172,800
Fixed selling and administrative   $24,600

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

What is the unit product cost for the month under absorption costing?
$93 per unit
$66 per unit
$74 per unit
$101 per unit

Explanation / Answer

Total Unit Unit Produced 6400 Direct Material 89600 14 Direct Labour 281600 44 Variable Manufacturing Overhead 51200 8 Fixed Manufacturing Overhead 172800 27 Production cost 595200 93 Answer $93

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