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Question 1: 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?
Option a) 12
Option b) 10
Option c) 6
Option d) 14
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