XYZ Inc. sells a single product for $20 per unit. Direct materials costs were $6 per unit, while direct labour and variable manufacturing overhead costs were $3 and $2 respectively. Fixed manufacturing overhead costs amount $20,000 per month. The company has a practical production capacity of 10,000 units per month. Variable selling costs are $2 per unit. Fixed selling costs are $10,000 per month. Last month, the company produced 20,000 units and sold 8,000 units. What is the company's product cost per unit using absorption costing?

Multiple Choice

• $12
• $10
• $6
• $14

I got 13.5. Can someone ehelp? not sure if I should divide Fixed manufacturing overhead $20,000 by unit capacity (10,000 units) or units sold (8,000 units)