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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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Solution Summary

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

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 ...

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