Units produced Units sold Sales price Direct materials Direc

Units produced Units sold Sales price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative costs Fixed selling and administrative costs 550 units 550 units $180 per unit $40 per unit $30 per unit $10 per unit $21,000 per year S5 per unit $25,000 per year What is the amount of unit product cost that will be considered for external reporting purposes? (Round any intermediate calculations and your final answer to the nearest cent.) O A. $110.00 O B. $68.18 OC. $108.18 O D. $118.18

Solution

Answer: The correct answer is D i.e. $118.18

Fixed manufacturing Overhead = Fixed Manufacturing Overhead / Units Sold
Fixed Manufacturing Overhead = $21,000 / 550
Fixed Manufacturing Overhead = $38.18

Total Unit Product Cost = Direct Materials + Direct Labor + Variable Manufacturing overhead + Fixed Manufacturing Overhead
Total Unit Product Cost = $40 + $30 + $10 + $38.18
Total Unit Product Cost = $118.18