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Assume that a company produced 10,000 units and sold 8,000 units during its first year of operations. It has also provided th
If the companys unit product cost under absorption costing is $194, then what is the amount of fixed manufacturing overhead
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Answer #1

Direct material per unit = $85

Direct labor per unit = $60

Variable manufacturing overhead per unit = $10

Fixed manufacturing overhead per unit = ?

Unit product cost = $194

Unit product cost = Direct material per unit + Direct labor per unit + Variable manufacturing overhead per unit + Fixed manufacturing overhead per unit

194 = 85 + 60 + 10 + Fixed manufacturing overhead per unit

Fixed manufacturing overhead per unit = $39

Number of units produced = 10,000

Total Fixed manufacturing overheads = Fixed manufacturing overhead per unit x Number of units produced

= 39 x 10,000

= $390,000

First option is correct.

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