Tremble Corporation manufactures and sells one product. The following information pertains to the company’s first year of operations:

Tremble Corporation manufactures and sells one product. The following information pertains to the company’s first year of operations:

Variable costs per unit:
Direct materials	$	106
Fixed costs per year:
Direct labor	$	1,156,000
Fixed manufacturing overhead	$	4,080,000
Fixed selling and administrative expenses	$	4,657,600

The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 68,000 units and sold 65,600 units. The company’s only product is sold for $278 per unit.

Assume that the company uses an absorption costing system that assigns $17 of direct labor cost and $60 of fixed manufacturing overhead to each unit that is produced. The unit product cost under this costing system is:

Multiple Choice

• $123 per unit
• $254 per unit
• $183 per unit

  Correct
• $106 per unit

Answer

Absorption costing unit product cost:

Direct materials	$	106
Direct labor		17
Fixed manufacturing overhead		60
Absorption costing unit product cost	$	183

Thank you!