Question

Exercise 2-8 Applying Overhead Cost; Computing Unit Product Cost [LO2-2, LO2-3] Newhard Company assigns overhead cost to jobs on the basis of 119% of direct labor cost. The job cost sheet for Job 313 includes $24,348 in direct materials cost and $10,800 in direct labor cost. A total of 1,500 units were produced in Job 313. Required: a. What is the total manufacturing cost assigned to Job 313? b. What is the unit product cost for Job 313? a. Total manufacturing cost b. Unit product cost

Answer 1

(a) Total manufacturing cost = Direct material cost + Direct labor cost + Overhead cost

Putting the values in the above equation, we get,

Total manufacturing cost = $24348 + $10800 + (119% * Direct labor cost)

Total manufacturing cost = $24348 + $10800 + (119% * $10800)

Total manufacturing cost = $35148 + $12852

Total manufacturing cost = $48000

(b) Unit product cost = Total manufacturing cost / Total number of units produced

Given: Total number of units produced = 1500, Total manufacturing cost = $48000 (as calculated in point (a)

Putting these values in the above equation, we get,

Unit product cost = $48000 / 1500 = $32 per unit