Smidt Corporation has provided the following data for its two most recent years of operation:

Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials $ 9 Direct labor $ 5 Variable manufacturing overhead $ 5 Fixed manufacturing overhead per year $ 140,000 Selling and administrative expenses: Variable selling and administrative expense per unit sold $ 5 Fixed selling and administrative expense per year $ 65,000 Year 1 Year 2 Units in beginning inventory 0 3,000 Units produced during the year 10,000 7,000 Units sold during the year 7,000 6,000 Units in ending inventory 3,000 4,000

The unit product cost under absorption costing in Year 1 is closest to:

Unitary cost= $33

Explanation:

Giving the following information:

Manufacturing costs:

Variable manufacturing cost per unit produced:

Direct materials $9

Direct labor $5

Variable manufacturing overhead $5

Fixed manufacturing overhead per year $ 140,000

Year 1:

Units produced during the year 10,000

Under absorption costing, the unitary product cost is calculated summing the direct material, direct labor, and total manufacturing overhead:

First, we need to calculate the unitary fixed manufacturing overhead:

Unitary fixed overhead= 140,000/10,000= $14 per unit

Unitary cost= direct material + direct labor + unitary overhead

Unitary cost= 9 + 5 + (5 + 14)= $33

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