Ross Corporation Produces a Single Product

question 284

Multiple Choice

Ross Corporation produces a single product. The company has direct materials costs of $8 per unit, direct labor costs of $6 per unit, and manufacturing overhead of $10 per unit. Sixty percent of the manufacturing overhead is for fixed costs. In addition, variable selling and administrative expenses are $2 per unit, and fixed selling and administrative expenses are $3 per unit at the current activity level. Assume that direct labor is a variable cost.Under variable costing, the unit product cost is:

• A) $24 per unit
• B) $20 per unit
• C) $18 per unit
• D) $21 per unit

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Definitions:

Gross Profit Percentage

A financial metric expressing gross profit as a percentage of total sales.

Net Sales

The total sales revenue of a company, minus the returns, allowances for damage or loss, and discounts.

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating the efficiency of a company in managing its production and supply chain.

Chief Executive Officer

The highest-ranking executive in a company, responsible for making major corporate decisions, managing overall operations, and resources.