Under Absorption Costing, a Company Had the Following Unit Costs

question 71

Multiple Choice

Under absorption costing, a company had the following unit costs when 9,000 units were produced. Compute the total product cost per unit under absorption costing if 25,000 units had been produced.

• A) $28.25
• B) $23.45
• C) $26.25
• D) $20.75
• E) $15.25

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Definitions:

Market Price

The ongoing market price for an asset or service available for purchase or sale.

Total Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue.

Average Total Assets

A measure calculated by averaging the total assets a company has at the beginning and end of the financial period, used to evaluate asset efficiency.

Net Sales

The amount of a company's gross sales minus its returns, allowances, and discounts.