Question

Lone Star has computed the following unit costs for the year just ended:

Direct material used $12
Direct labor $18
Variable manufacturing overhead $25
Fixed manufacturing overhead $29
Variable selling and administrative cost $10
Fixed selling and administrative cost $17
Under absorption costing, each unit of the company's inventory would be carried at:

$55.
$65.

some other amount.

$84.
$35.

Answer 1

Answer:

$84

Explanation:

The computation of each unit of the company's inventory under absorption costing is shown below:

= Direct material used  + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead  

= $12 + $18 + $25 + $29

= $84

We simply added the first four-unit cost through which total unit cost would come

All other information which is given is not relevant. Hence, ignored it