Q2SE - Horngren'S Financial And Managerial Accounting

Question

 Computing unit product cost, absorption costing Calculate the unit product cost using absorption costing. Round your answer to the nearest cent.

Use the following information for Short Exercises S21-2 and S21-3. 

Martin Company had the following costs: 

Units produced                                                      320 units                                                              Direct materials                                                   $ 71 per unit                                                               Direct labor                                                            40 per unit                                                               Variable manufacturing overhead                        13 per unit                                                               Fixed manufacturing overhead                             7,360 per year                                                           Variable selling and administrative costs           22 per unit                                                        

Fixed selling and administrative costs                1,920 per year

 

Step-by-Step Solution

Answer

Answer

 

The total unit product cost is $147.

Step 1: Calculation of fixed manufacturing overhead

Fixed manufacturing overhead = Total fixed manufacturing overhead / No. of units produced

=$7,360/320

=$23

Step 2: Calculation of unit product cost

Particulars	Amount
Direct material	$71
Direct labor	$40
Variable manufacturing overhead	$13
Fixed manufacturing overhead	$23
Total unit product cost	$147