Question

11). Befuddled But Brilliant Old Professor Mullen's Gourmet Food Company sells its product for $60 per unit. During 2017, it produced 60,000 units and sold 50,000 units (there was no beginning inventory or BI= 0). Costs per unit are: direct materials (DM) $15, direct labor (DL) $9, and variable overhead (VOH) $3. Fixed costs are: $720,000 (FOB) manufacturing overhead, and $90,000 (S&A) selling and administrative expenses.The per unit (product) manufacturing cost under absorption costing (ABS) is

A)	$24.
B)	$27.
C)	$39.
D)	$41.

Answer 1

C)	$39. Working:

a.
	Fixed Manufacturing Overhead per unit				=	Fixed manufacturing Overhead/Total Units manufactured
					=	$       7,20,000	/	60,000
					=	$             12.00
b.				Per Unit
	Direct Materials			$    15.00
	Direct Labor			$       9.00
	Variable overhead			$       3.00
	Fixed Overhead			$    12.00
	Total			$    39.00
Selling and administration expenses are not part of manufacturing cost.