Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price

Units in beginning inventory O

Units produced

Units sold

$ 78

8,800

8,700

Units in ending inventory 100

Variable costs per unit:

Direct materials

Direct labor

Variable manufacturing overhead

$ 18

$ 10

$4

Variable selling and administrative expense $ 5

Fixed costs:

Fixed manufacturing overhead

$ 255,200

Fixed selling and administrative expense $ 87,000

What is the unit product cost for the month under absorption costing?

• $32 per unit

O $61 per unit

O $37 per unit

• $66 per unit

To calculate the unit product cost under absorption costing, we need to account for both the variable manufacturing costs and the allocated fixed manufacturing overhead.

### Step-by-Step Calculation

1. **Calculate Total Variable Manufacturing Cost per Unit**
   - Direct materials: $18
   - Direct labor: $10
   - Variable manufacturing overhead: $4

   **Total Variable Manufacturing Cost per Unit** = $18 + $10 + $4 = **$32**

2. **Calculate Fixed Manufacturing Overhead per Unit**
   - Fixed manufacturing overhead = $255,200
   - Units produced = 8,800

   **Fixed Manufacturing Overhead per Unit** = $255,200 / 8,800 = **$29**

3. **Calculate Unit Product Cost under Absorption Costing**
   Absorption costing includes both variable manufacturing costs and fixed manufacturing overhead.

   \[
   \text{Unit Product Cost} = \text{Total Variable Manufacturing Cost per Unit} + \text{Fixed Manufacturing Overhead per Unit}
   \]
   \[
   = 32 + 29 = 61
   \]

### Conclusion
The **unit product cost for the month under absorption costing is $61 per unit**.

### Answer
**The correct answer is: $61 per unit**

Would you like more details or have any questions?

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### Related Questions
1. How would the unit product cost change if the fixed manufacturing overhead increased?
2. What would the unit product cost be under variable costing?
3. How does absorption costing differ from variable costing in terms of fixed overhead treatment?
4. What is the impact of ending inventory on absorption costing profit?
5. How would selling and administrative expenses impact the overall net profit?

**Tip:** Absorption costing spreads fixed manufacturing costs across all units produced, which can affect inventory valuation and profit when inventory levels change.

Learn how to calculate the unit product cost under absorption costing for Farris Corporation. This example covers cost accounting concepts such as variable and fixed costs, with a detailed solution showing the breakdown of costs to arrive at a unit product cost of $61 per unit. Perfect for college-level accounting and finance studies.

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