Question

Murphy Inc., which produces a single product, has provided the following data for its most recent month of operation: 16,900 Number of units produced Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expenses $ $ 109 77 12 $997, 100 $388,709 The company had no beginning or ending inventories. Required: a. Compute the unit product cost under absorption costing. b. Compute the unit product cost under variable costing. Unit Product Cost a. Absorption costing b. Variable costing

Answer 1

Net operating income of company = $27,000

Common fixed expenses = $58,000

Segment margin of product Q = $50,000

Contribution margin of product P = $48,000

Segment margin of product P = ?

Segment margin of company = Net operating income of company + Common fixed expenses

= 27,000+58,000

= $85,000

Segment margin of company = Segment margin of product Q + Segment margin of product P

85,000 = 50,000 + Segment margin of product P

Segment margin of product P = $35,000

First option is correct option.

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