Arizona Company Provided the Following Information Regarding Its Only Product--Skateboards

question 82

Multiple Choice

Arizona Company provided the following information regarding its only product--skateboards. $\begin{array}{lr}\text { Direct materials used } & \$ 350,000 \\\text { Direct labor } & 170,000 \\\text { Fixed overhead } & 80,000 \\\text { Variable overhead } & 20,000 \\\text { Variable selling and administrative } & 90,000 \\\\\text { Units produced and sold } & 40,000\end{array}$ The difference in manufacturing cost per unit, if the absorption approach is used in place of the contribution approach, is _____.

• A)cost per unit increases by $2
• B)cost per unit decreases by $2
• C)cost per unit increases by $0.75
• D)cost per unit decreases by $0.75