Comet Canisters, Inc What Is the Unit Product Cost Using Absorption Costing? (Round

question 64

Multiple Choice

Comet Canisters, Inc. has collected the following data for the current year: $$\begin{array} { | l | r | l | } \hline \text { Beginning Finished Goods Inventory } & 50 & \text { units } \\\hline \text { Units produced } & 500 & \text { units } \\\hline \text { Units sold } & 550 & \text { units } \\\hline \text { Sales price } & \$ 180 & \text { per unit } \\\hline \text { Direct materials } & \$ 16 & \text { per unit } \\\hline \text { Direct labor } & \$ 17 & \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 10 & \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 10,800 & \text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 4 & \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 12,500 & \text { per year } \\\hline\end{array}$$ What is the unit product cost using absorption costing? (Round your answer to the nearest cent.)

• A) $93.60
• B) $43.00
• C) $64.60
• D) $48.60

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Definitions:

Reversing Entries

Journal entries usually made at the beginning of an accounting period to reverse or cancel out adjusting entries from the end of the previous period.

Allowance Method

An accounting technique used to anticipate and adjust for potential future losses from uncollectible accounts receivable.

Uncollectible Accounts

Accounts receivable that are recognized as not being collectible, leading to a write-off as a bad debt expense.

Bad Debts Expense

Bad debts expense is an estimate of the accounts receivable that a company does not expect to collect, treated as an expense on the income statement.