Question

Beamish Inc., which produces a single product, has provided the following data for its most recent month of operations:

Number of units produced		9,700
Variable costs per unit:
Direct materials	$	121
Direct labor	$	105
Variable manufacturing overhead	$	6
Variable selling and administrative expense	$	13
Fixed costs:
Fixed manufacturing overhead	$	349,200
Fixed selling and administrative expense	$	727,500

There were no beginning or ending inventories. The absorption costing unit product cost was:

Multiple Choice

$226 per unit

$356 per unit

$268 per unit

$232 per unit

Answer 1

	Absorption Costing
Direct Meterial	$                                121
Direct Labour	$                                105
Variable Manufactoring Overhead	$                                    6
Fixed Manufactoring Overhead ($349,200 / 9,700)	$                                  36
Unit Product Cost	$                                268

Answer is C. $268 per unit

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

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