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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
Total variable costs per unit \$150.33

Monthly Fixed costs:
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?

#### 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