Murphy inc., which produces a single product, has provided the following data for its most recent month of operation: number of units produced 16,900 variable costs per unit: direct materials $ 109 direct labor $ 77 variable manufacturing overhead $ 9 variable selling and administrative expenses $ 12 fixed costs: fixed manufacturing overhead $ 997,100 fixed selling and administrative expenses $ 388,700 the company had no beginning or ending inventories. required: a. compute the unit product cost under absorption costing. b. compute the unit product cost under variable costing.

Instructions are listed below.

Explanation:

Giving the following information:

Number of units produced 16,900

Variable costs per unit:

Direct materials $ 109

Direct labor $ 77

Variable manufacturing overhead $ 9

Variable selling and administrative expenses $ 12

Fixed costs:

Fixed manufacturing overhead $ 997,100

Fixed selling and administrative expenses $ 388,700

A) Absorption costing:

Direct materials $ 109

Direct labor $ 77

Variable manufacturing overhead $ 9

Fixed manufacturing overhead (997,100/16,900)= 59

Unitary cost= $254

B) Variable costing:

Direct materials $ 109

Direct labor $ 77

Variable manufacturing overhead $ 9

Unitary cost= $195

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