Question

) Antennas, Inc., produces and sells a unique type of TV antenna. The company opened a new plant to manufacture the antenna, and the following cost and revenue data have been provided for the first year of the plant's operation:

Beginning Inventory	0
Units produced	40,000
Units sold	35,000
Selling price per unit	60
Selling and administrative expenses:
Variable per unit	2
Fixed (total)	200,000
Manufacturing costs:
Direct materials cost per unit	15
Direct labor cost per unit	7
Variable manufacturing overhead cost per unit	4
Fixed manufacturing overhead cost (total)	640,000

Under absorption costing, the unit product cost is:

Group of answer choices

44.29

26.00

42.00

28.00

49.71

Answer 1

Under absorption costing, product cost includes fixed manufacturing costs abosorbed. Fixed Manufacturing costs will be absorbed on the number of units manufactured. Such Fixed costs absorbed for unsold qty will be reflecting in the closing stock unlike in Marginal Costing. Selling and Distribution costs will not be included in Unit Product Costs.

1. Unit Product cost under absorption costing :
Direct Material	$          15.00
Direct labour	$            7.00
Variable manfacturing Overhead	$            4.00
Fixed manfacturing Overhead (640000//40000)	$          16.00
	$          42.00

So, correct answer is 42

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