Under FASAB standards, specifically SFFAS No. 4, Managerial Cost Accounting Standards, the full cost of an output includes:
Direct costs (e.g., direct material and labor)
Indirect costs (e.g., inter-entity costs, overhead, services)
In-kind contributions
Any support service costs
Depreciation or amortization, if applicable
We will now compute the full cost of all 5 units and then divide by 5 to obtain the cost per unit.
Step 1: List and sum all relevant costs.
Direct Material: $11,267,000
Direct Labor: $5,980,000
Inter-entity Costs: $1,500,000
Accounting and Contracting Services: $500,000
Physical and Data Security: $700,000
In-kind Logistics Services: $500,000
Warehouse Lease: $1,000,000
Parking Lot Construction: $3,000,000
Equipment Installation: $600,000
New Employee Training: $100,000
Total Full Cost =
$11,267,000
$5,980,000
$1,500,000
$500,000
$700,000
$500,000
$1,000,000
$3,000,000
$600,000
$100,000
= $25,147,000
Step 2: Calculate cost per unit (based on 5 outputs):
Cost per unit = $25,147,000 5 = $5,029,400
But the question specifically asks:
''Based on FASAB standards, calculate the full cost of 1 unit of an output...''
So, the correct answer (full cost of all units) is:
Answer : D. $25,147,000
If they had asked for cost per unit, then the answer would be:
= $5,029,400 Option C
Note: Option C is a distractor here and would only be correct if the question specifically asked for per unit cost.
Relevant Standards and Reference:
FASAB Statement of Federal Financial Accounting Standards (SFFAS) No. 4: Managerial Cost Accounting Concepts and Standards
OMB Circular A-136: Financial Reporting Requirements
Treasury Financial Manual (TFM), Volume I, Part 2, Chapter 4700
Therefore, the correct answer to the full cost (not per unit) is:
Answer : D. $25,147,000.
