Question

Bonita Industries sells its product for $90 per unit. During 2019, it produced 60000 units and sold 50000 units (there was no beginning inventory). Costs per unit are: direct materials $23, direct labor $15, and variable overhead $4. Fixed costs are: $720000 manufacturing overhead, and $90000 selling and administrative expenses. The per unit manufacturing cost under absorption costing is

Answer 1

Answer:

Unitary production cost= $54

Explanation:

Giving the following information:

During 2019, it produced 60000 units

Costs per unit are:

direct materials $23

direct labor $15

variable overhead $4

Fixed manufacturing overhead= 720,000

The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

Unitary fixed overhead= 720,000/60,000= $12

Now, the unitary manufacturing cost:

Unitary production cost= 23 + 15 + 4 + 12= $54