Advanced company reports the following information for the current year. all beginning inventory amounts equaled $0 this year. units produced this year 25,000 units units sold this year 15,000 units direct materials $ 9 per unit direct labor $ 11 per unit variable overhead $ 75,000 in total fixed overhead $ 137,500 in total given advanced company's data, compute cost per unit of finished goods under absorption costing. $20.00 $34.17 $25.32 $23.00 $28.50

The cost per unit of finished goods under absorption costing is $28.50

Therefore, the correct option is d. $28.50

Explanation:

Absorption costing : Under absorption costing, all types of cost is to be recorded whether it is fixed or variable.

The computation of cost per unit of finished goods is shown below:

= Total cost ÷ units produced

where,

total cost is = direct material + direct labor + variable overhead + fixed overhead

= $9 × 25,000 units + $11 × 25,000 units + $75,000 + $137,500

= $225,000 + $275,000 +$75,000 + $137,500

= $712,500

And, units produced is 25,000 units.

So, cost per unit =  $712,500 ÷ 25,000 units

                           = $28.50

Hence, the cost per unit of finished goods under absorption costing is $28.50

Therefore, the correct option is d. $28.50

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