Multiple Choice Question 103 Swifty Corporation sells its product for $50 per un

Question

Multiple Choice Question 103 Swifty Corporation sells its product for $50 per unit. During 2016, it produced 60000 units and sold 50000 units (there was no beginning inventory). Costs per unit are: direct materials $6, direct labor $5, and variable overhead $2. Fixed costs are: $720000 manufacturing overhead, and $90000 selling and administrative expenses. The per unit manufacturing cost under absorption costing is O $26. O $11. O $25. O $13. Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Selling and administrative expenses (both variable and fixed) are not relevant for the computation of unit product cost.

Answer is: $25 per unit

Computation of Unit Product Cost Absorption Costing Direct Meterial $                            6.00 Direct Labour $                            5.00 Variable Manufactoring Overhead $                            2.00 Fixed Manufactoring Overhead ($720,000/60,000) $                         12.00 Unit Product Cost $                         25.00

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