Question

Merrell Company manufactures several different products. Unit costs associated with Product MLL101 are as follows: Direct materials $60; Direct manufacturing labor $10; Variable manufacturing overhead $18; Fixed manufacturing overhead $32; Sales commissions (2% of sales) $4; Administrative salaries $16; Total $140. What are the inventoriable costs per unit associated with Product MLL101?

		$120
		$140
		$50
		$88

Answer 1

Calculation of Inventoriable Costs Per Unit associated with Product MLL101:

Particulars	Cost Per Unit ($)
Direct Materials	60
Direct Manufacturing Labour	10
Variable Manufacturing Overhead	18
Fixed Manufacturing Overhead	32
Total	120

Sales Commissions and Administrative Salaries are considered to be Period Costs. Thus, excluded while calculating Inventoriable Costs.