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17 April, 23:17

Ross Corporation produces a single product. The company has direct materials costs of $8 per unit, direct labor costs of $6 per unit, and manufacturing overhead of $10 per unit. Sixty percent of the manufacturing overhead is for fixed costs. In addition, variable selling and administrative expenses are $2 per unit, and fixed selling and administrative expenses are $3 per unit at the current activity level. Assume that direct labor is a variable cost. Under absorption costing, the unit product cost is:

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  1. 18 April, 00:50
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    unit cost 24

    Explanation:

    DM 8

    DL 6

    MFO 10 (4 variable + 6 fixed)

    Absorption unit cost 24

    under absorption cost, selling and adminsitrative expense are considered period cost.

    They are not capitalized through inventory.
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