Chapter 21, Problem S21A.19SE

To determine

Absorption Costing method:

Under absorption costing all variable productions costs and fixed manufacturing overhead cost are considered as product costs and all other fixed costs are considered as period costs. The formula for calculation of unit product cost under Absorption Costing method is as follows:

$\text{Unit Product cost = }\frac{\left(\begin{array}{l}\text{(Direct Material + Direct Labor + Variable Manufacturing }\\ \text{Overhead)}\times \text{Units Produced +Fixed Manufacturing overheads }\end{array}\right)}{\text{Units produced}}$

To determine:

The unit product cost using the Absorption Costing method