Gangwer Corporation produces a single product and has the fo

Gangwer Corporation produces a single product and has the following cost structure:

Number of units produced each year ----------- 6,000

Variable cost per unit:

   Direct material ---------------------------------- $43

   Direct labor --------------------------------------$13

   Variable manufacturing overhead ------------------- $5

   Variable selling and administrative expense ----- $1

Fixed costs per year:

   Fixed manufacturing overhead ----------------------- $204,000

   Fixed selling and administrative expense ----------$138,000

The absorption costing unit product cost is:

$95

$119

$61

$56

	a.	$95
	b.	$119
	c.	$61
	d.	$56

Solution

Direct material 43 Direct labor 13 Variable manufacturing overhead 5 Fixed manufacturing overhead 34 =204000/6000 Absorption costing unit product cost 95 Option A is correct