Cost and Management AccountingQuestion 5419 of 251
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2. What is full cost per unit of product Y under traditional absorption costing method?

Options

A` 19.92
B` 4.44
C` 46.32
D` 15.44
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Correct Answer

✅ Option A — ` 19.92

All Options:

  • A` 19.92 ✓
  • B` 4.44
  • C` 46.32
  • D` 15.44

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Detailed Solution & Explanation

Under the traditional absorption costing method, the full cost per unit of product Y is the sum of direct material cost, direct labour cost, and absorbed overheads per unit:
Full Cost per Unit=Direct Material Cost per Unit+Direct Labour Cost per Unit+Absorbed Overheads per Unit\text{Full Cost per Unit} = \text{Direct Material Cost per Unit} + \text{Direct Labour Cost per Unit} + \text{Absorbed Overheads per Unit}
Where the absorbed overheads per unit is calculated as:
Absorbed Overheads per Unit=Direct Labour Hours per Unit×Overhead Absorption Rate\text{Absorbed Overheads per Unit} = \text{Direct Labour Hours per Unit} \times \text{Overhead Absorption Rate}
From the given data:
1. Direct Material Cost per Unit = ₹12.00 (as given)
2. Direct Labour Cost per Unit = ₹3.48 (as given)
3. Absorbed Overheads per Unit = 0.15 hours×₹29.60/hour=₹4.44\displaystyle 0.15 \text{ hours} \times \text{₹} 29.60/\text{hour} = \text{₹} 4.44
Full Cost of Y=12.00+3.48+4.44=₹19.92 per unit\text{Full Cost of Y} = 12.00 + 3.48 + 4.44 = \text{₹} 19.92 \text{ per unit}
Hence, **Option A** is the correct answer.

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