Sherman, Inc. manufactures chainsaws that sell for $66. Each chainsaw uses $14 in direct materials and $9 in direct labor per unit. Sherman has two activities: Machining, which is applied at the rate of $4 per machine hour, and Finishing, which is applied at the rate of $20 per batch. This month, Sherman made 250 chainsaws, using 1,125 machine hours in 50 batches. What is the total manufacturing cost for one chainsaw? (Do not round intermediate calculations.)
Activity | Activity used | Activity rate | Activity cost |
Machining | 1,125 machine hours | $4 per machine hour | 1,125 x 4 = $4,500 |
Finishing | 50 batches | $20 per batch | 50 x 20 = $1,000 |
Total | $5,500 |
Total overhead costs = $5,500
Number of chainsaws produced = 250
Overhead per chainsaw = Total overhead costs/Number of chainsaws produced
= 5,500/250
= $22
Total manufacturing cost for one chainsaw = Direct materials per chainsaw+ Direct labor per chainsaw+ Overhead per chainsaw
= 14 + 9 + 22
= $45
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Sherman, Inc. manufactures chainsaws that sell for $66. Each chainsaw uses $14 in direct materials and...
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