Green Company has no beginning and ending inventories, and reports the following information for its only product: Direct materials used $475,000 Direct labor $100,000 Fixed indirect manufacturing $125,000 Variable indirect manufacturing $50,000 Variable selling and administrative $60,000 Fixed selling and administrative $25,000 Units produced and sold 150,000 Blue Company uses the absorption approach to prepare the income statement. What is the product cost per unit?

$5 per unit

Explanation:

Product cost is the Total cost incurred in the production of a product which includes material, labor and overhead cost.

As per given data

Units produced and sold 150,000

Direct material cost = $475,000

Direct labor = $100,000

Manufacturing overhead includes the fixed and variable overheads

Fixed indirect manufacturing      $125,000

Variable indirect manufacturing $50,000

Total Manufacturing overhead   $175,000

Unit Product cost = Total Product cost / Unit Produced = ( 475,000 + $100,000 + $175,000 ) / 150,000 = $750,000 / 150,000 = $5 per unit

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