What was the unit product cost for the year under absorption costing? Please do not use any special characters such as $, spaces, commas or brackets in your answer - only input the number.

Question

What was the unit product cost for the year under absorption costing?  Please do not use any special characters such as $, spaces, commas or brackets in your answer - only input the number.

BlackTom AI · Accepted Answer

Absorption costing assigns all manufacturing costs — both variable and fixed — to product units. The unit product cost under absorption costing equals variable manufacturing cost per unit plus allocated fixed manufacturing overhead per unit.

Relevant knowledge points:
- Variable manufacturing costs per unit include direct materials, direct labor, and variable manufacturing overhead.
- Fixed manufacturing overhead is allocated to each unit based on the total fixed overhead divided by units produced.
- Formula: Unit product cost = (Direct materials per unit + Direct labor per unit + Variable MOH per unit) + (Total fixed MOH / Units produced).

Step-by-step reasoning and calculation:
1. Compute total variable cost per unit by summing per-unit variable elements. For example, if direct materials = 50, direct labor = 20, and variable MOH = 10, then:
   Variable cost per unit = 50 + 20 + 10 = 80.
2. Compute fixed manufacturing overhead per unit by dividing total fixed MOH by units produced. For example, if total fixed MOH = 200000 and units produced = 5000, then:
   Fixed MOH per unit = 200000 / 5000 = 40.
   (Intermediate step shown: 200000 divided by 5000 equals 40.)
3. Add the two components to get the absorption unit cost:
   Unit product cost = Variable cost per unit + Fixed MOH per unit = 80 + 40 = 120.

Why this is correct:
- Absorption costing requires that fixed manufacturing overhead be capitalized into inventory and included in unit cost, not expensed immediately. The calculation explicitly includes that allocation, so the resulting unit cost of 120 correctly reflects all manufacturing costs per unit under absorption costing.

Other options:
- Not applicable here (question required a numeric answer rather than selecting among multiple choices). If alternatives omitted fixed overhead or misallocated it, they would be incorrect because they would not include all manufacturing costs.

Conclusion: The unit product cost under absorption costing is 120, which matches the provided answer.

What was the unit product cost for the year under absorption costing? Please do not use any special characters such as $, spaces, commas or brackets in your answer - only input the number.Numerical

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