Under Absorption Costing, a Company Had the Following Unit Costs

question 34

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:

Interest Tax Shield

The reduction in income taxes that results from the deductibility of interest payments from taxable income.

Capital Structure

The combination of debt and equity financing that a company uses to fund its operations and growth.

Capital Structure

The mix of different forms of financing used by a company, such as debt, equity, and other types of financing.