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7 May, 14:49

Lily's Pastries produces cupcakes, which sell for $5.10 each. During the current month, Lily produced 3200 cupcakes, but only sold 2700 cupcakes. The variable cost per cupcake was $3.40 and the sales commission per cupcake was $0.50. Total fixed manufacturing costs were $1700 and total fixed marketing and administrative costs were $900. What is the product cost per cupcake under absorption costing?

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  1. 7 May, 14:59
    0
    Unitary cost = $3.92

    Explanation:

    Giving the following information:

    Lily produced 3200 cupcakes.

    The variable cost per cupcake was $3.40.

    Total fixed manufacturing costs were $1700

    Under the absorption costing method, the unitary product cost is calculated using the variable cost and the fixed manufacturing costs.

    Unitary cost = unitary variable cost + unitary fixed overhead

    Unitary cost = 3.4 + 1,700/3,200 = $3.92
  2. 7 May, 15:17
    0
    Answer: $3.93

    Explanation:

    Given the following

    Variable cost per unit = $3.40

    Fixed manufacturing cost = $1700

    Total Units produced=3200

    Uaing absorption costing which incorporates the cost of fixed manufacturing cost of goods in the unit price of goods.

    Absorption costing per unit = Variable cost per unit + fixed cost per unit

    Variable cost per unit = $3.40

    Fixed cost per unit = (Total manufacturing cost : Total unit produced)

    Fixed cost per unit = $1700 : 3200 = $0.53

    Absorption costing per unit = $3.40 + $0.53 = $3.93
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