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Toys Unlimited has the following cost data available. Direct Materials are $99 per unit. Direct Labot is $55 per unit. Variable Manufacturing Costs are $25 per unit. Fixed Manufacturing Costs are $200,000. Toys Unlimited sold 3,500 units. They produced 4,000 units. Using Absorption costing, what is the production cost per unit?

a. $154
b. $179
c. $229
d. $236

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Answer:

c. $229

Explanation:

Using absorption costing, the total production cost per unit is given by the sum of the costs of: direct materials per unit, direct labor per unit, variable manufacturing per unit and fixed manufacturing per unit. At 4,00 units produced, the cost per unit is:

[tex]C= 99+55+25+\frac{200,000}{4,000}\\ C= \$229[/tex]

The production cost per unit is $229

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