Excerpt from Areojet Corporation Per Unit Per Month Selling price $ 200,000 Direct materials 40,000 Direct labor 10,000 Variable manufacturing overhead 2,000 Fixed manufacturing overhead $ 140,000 Variable selling and administrative expenses 20,000 Fixed selling and administrative expenses 40,000 January February March Beginning inventory 0 0 3 Units produced 4 5 2 Units sold 4 2 5 Ending inventory 0 3 0 What is the unit product cost for the month of February, using the absorption costing method? 52,000 80,000 87,000 122,000

Absorption Cost                           $192,000

Variable Cost                           $52,000

Explanation:

Areojet Corporation

Absorption Costing

                          Unit Product Cost

Direct materials 40,000

Direct labor 10,000

Variable manufacturing overhead 2,000

Fixed manufacturing overhead $ 140,000

Absorption Cost                           $192,000

Areojet Corporation

Variable Costing

                          Unit Product Cost

Direct materials 40,000

Direct labor 10,000

Variable manufacturing overhead 2,000

Variable Cost                           $52,000

There really is no good reason for that change.