Murphy Inc., which produces a single product, has provided the following data for its most recent...

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Murphy Inc., which produces a single product, has provided the following data for its most recent...

Murphy Inc., which produces a single product, has provided the following data for its most recent month of operation:


Number of units produced		7,000
Variable costs per unit:
Direct materials	$	86
Direct labor	$	71
Variable manufacturing overhead	$	2
Variable selling and administrative expenses	$	7
Fixed costs:
Fixed manufacturing overhead	$	378,000
Fixed selling and administrative expenses	$	98,000

The company had no beginning or ending inventories.

Required:

a. Compute the unit product cost under absorption costing.

b. Compute the unit product cost under variable costing.

business accounting

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Answer 1

Answer #1

Fixed manufacturing overhead per unit=(378,000/7000)=$54 per unit

a.Unit product cost=Direct materials+Direct labor+Variable manufacturing overhead+Fixed manufacturing overhead

=(86+71+2+54)=$213

b.Unit product cost=Direct materials+Direct labor+Variable manufacturing overhead

=(86+71+2)=$159

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Answer 2

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