Omega Company produced 100, 000 units of product Rex during the month of June. Cost incurred during June were as follows:DM-P 100, 000DL-P 80, 000Vr. Mfg head-P 40, 000Fx Mfg head-P 50, 000Vr selling and general expenses-P 12, 000Fixed selling and general expenses-P 46, 000Total-P 327, 000what was the product Rexs unit cost under absorption costing?

VARIABLE COSTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Omega Company produced 100, 000 units of product Rex during the month of June. Cost incurred during June were as follows:DM-P 100, 000DL-P 80, 000Vr. Mfg head-P 40, 000Fx Mfg head-P 50, 000Vr selling and general expenses-P 12, 000Fixed selling and general expenses-P 46, 000Total-P 327, 000what was the product Rex’s unit cost under absorption costing?

A	P 3.27
B	P 2.70
C	P 2.32
D	P 1.80

Explanation:

Detailed explanation-1: -The correct answer is C-direct material costs.

Detailed explanation-2: -Product costs under absorption costing include both manufacturing costs. Product costs under variable costing include only variable manufacturing costs. Absorption costing accounts for fixed manufacturing overhead as a product cost. Variable costing accounts for fixed manufacturing overhead as a period cost.

Detailed explanation-3: -Under the variable costing method, all selling and administrative (fixed and variable) expenses and fixed manufacturing overhead is considered part of the total period cost.

Detailed explanation-4: -With absorption costing, gross profit is derived by subtracting cost of goods sold from sales. Cost of goods sold includes direct materials, direct labor, and variable and allocated fixed manufacturing overhead.

There is 1 question to complete.

ECONOMICS

COST ACCOUNTING

VARIABLE COSTING