Chapter 21, Problem 4QC

Donovan Company incurred the following costs while producing 500 units: direct materials, $10 per unit; direct labor, $25 per unit; variable manufacturing overhead, $15 per unit; total fixed manufacturing overhead costs, $10,000; variable selling and administrative costs, $5 per unit; total fixed selling and administrative costs, $7,500. There are no beginning inventories.

What is the unit product cost using absorption costing?

1. a. $50 per unit
2. b. $55 per unit
3. c. $70 per unit
4. d. $90 per unit