Allentown Aqua,Inc What Is the Unit Product Cost Using Variable Costing?
A)$55

question 93

Multiple Choice

Allentown Aqua,Inc.has provided the following information for the year. $$\begin{array} { | l | r | r|} \hline \text { Units produced } & 11,000 &\text { units } \\\hline \text { Sales price } & \$ 400 &\text { per unit } \\\hline \text { Direct materials } & \$ 20 &\text { per unit } \\\hline \text { Direct labor } & \$ 35& \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 70& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 470,000& \text { per year } \\\hline \text { Variable selling and administration costs } & \$ 90& \text { per unit } \\\hline \text { Fixed selling and administration costs } & \$ 240,000 &\text { per year } \\\hline\end{array}$$ What is the unit product cost using variable costing?

• A)$55
• B)$105
• C)$125
• D)$168

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Definitions:

Salvage Value

The anticipated recovery value of an asset after its period of usefulness ends.

Trade-In Allowance

The value that a dealer offers to a customer for the customer's used item (e.g., car) when purchasing a new item.

Accumulated Depreciation

The total depreciation for a fixed asset that has been charged to expense since the asset was acquired and made available for use.

Commercial Substance

A concept in accounting that indicates a transaction significantly alters the economic position or cash flows of an entity.