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    Absorption Costing: Calculating the Unit Product Cost

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    Billy Bing Ping Pong Corporation manufactures a single product, premium pink ping pong balls. Each premium pink ping pong ball sells for $500.00 each. Selected operating information from last month is as follows:

    Variable costs per unit:
    Direct materials $17.50
    Direct labor $5.33
    Manufacturing overhead $2.50
    Selling & administrative $125.00
    Total variable costs per unit $150.33

    Monthly Fixed costs:
    Manufacturing overhead $27,500
    Selling & administrative $173,500
    Total fixed costs $201,000

    Units in beginning inventory 0
    Units produced 7,350
    Units sold 7,243
    Units in ending inventory 107

    Under absorption costing, what is the unit product cost for one premium pink ping pong ball?

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    https://brainmass.com/business/accounting/absorption-costing-calculating-unit-product-cost-409054

    Solution Preview

    Solution is provided in a separate excel file attached.

    Billy Bing Ping Pong Corporation:
    Data used in the problem
    Selling price $500
    Units in beginning inventory 0
    Units produced 7350 Units
    Units sold 7243 Units
    Units in ending inventory 107 Units
    Variable costs per unit:
    Direct material per unit 17.50
    Direct labor per unit 5.33
    Manufacturing overhead 2.50
    Variable manufacturing cost per unit $25.33
    Variable selling and administrative ...

    Solution Summary

    In this solution, we calculate the unit product cost of the given product.

    $2.19