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Fact Pattern: The following are the estimated unit costs for a manufacturer with no beginning inventories that uses absorption costing and expects to manufacture and
Fact Pattern:
The following are the estimated unit costs for a manufacturer with no beginning inventories that uses absorption costing and expects to manufacture and sell 12,000 units per month:
| Estimated | ||
Cost Item | Unit Cost | ||
| | ||
Direct materials | $16 | ||
Direct labor | 10 | ||
Variable manufacturing overhead | 7.50 | ||
Fixed manufacturing overhead | 3 | ||
Variable selling | 1.50 | ||
Fixed selling | 2 |
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Estimated monthly prime costs are
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