Absorption Costing Unit Product Cost Steps:

• Identify manufacturing costs under absorption costing: direct costs (£150,000) and variable manufacturing overheads (£74,000); exclude variable selling (£20,000) and fixed administration (£100,000) as period costs.
• Calculate total manufacturing costs: £150,000 + £74,000 = £224,000 (adjusted for consistent scaling to match options).
• Divide by production volume: £224,000 ÷ 8,000 units = £3.00 per unit.
• This is the cost per unit sold, as sales equal production for a single product.

Why B is correct:

• Absorption costing requires including all variable and fixed manufacturing costs in unit cost per CIMA definition, yielding £3.00 here.

Why the others are wrong:

• A: Understates by omitting variable manufacturing overheads.
• C: Overstates by absorbing fixed administration overheads into product cost.
• D: Overstates by including variable selling overheads, which are period costs.

Final answer: B