Question

FCO, Inc. manufactures a single product that it sells for $208 per unit. The company had...

FCO, Inc. manufactures a single product that it sells for $208 per unit. The company had the following cost structure thsi year:

  • Variable Manufacturing Cost per unit: $50
  • Variable Selling and Administrative cost per unit: $21
  • Fixed Manufacturing Cost, Total: $1,599,000
  • Fixed Selling and Administrative Costs, Total: $934,000

There were no units in beginning inventory. During the year, 44,000 units were produced and 38,000 units were sold.

Under absorption costing, the unit product cost is:

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Answer #1

Unit Product Cost [ Absorption Costing ] = $ 86.34

Calculation:

Unit Product Cost [ Absorption Costing]

Variable Manufacturing Cost $                50.00
Fixed Manufacturing Cost [$ 1,599,000/44000 Units] $                36.34
Unit Product Cost $                86.34

Answer is rounded to two decimal places.

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