Novartis began its operations on January 1 and produces a single product that sells for $10.75 per unit. Standard capacity is 80,000 units per year. The 80,000 units were produced and 72,000 units were sold during the year.

Manufacturing costs and selling and administrative expenses follow:

Fixed Costs Variable Costs

Raw materials -- $3.00 per unit produced Direct labor -- 1.50 per unit produced Factory overhead $120,000 1.00 per unit produced

Selling and Admin 80,000 50 per unit sold

What is the standard cost of manufacturing a unit of product?

a. $6.50

b. $6.00

c. $7.00

d. $5.50