Question

Question 3
Details of costs and inventory balances at the end of a production period are as follows:
Total production costs	$2,000,000
Opening finished goods	120,000
Units sold	370,000
Closing finished goods	150,000
Percentage of product costs that are prime costs	70%
Percentage of conversion costs that are direct labour	60%
Calculate the following:
	Calculations
Number of units produced during the period
Product cost per unit
Direct material per unit
Direct labour per unit
Factory overhead per unit

Answer 1

Number of units sold	370,000
Add: Closing finished goods	150,000
Less: Opening finished goods	(120,000)
Number of units produced during the period	400,000

Total production costs	$   2,000,000
Number of units produced during the period	400,000
Product cost per unit ($2,000,000/400,000)	$                   5

Total Factory overhead cost ($2,000,000*30%)	$   600,000
Total direct labor cost ($600,000/40%*60%)	$   900,000
Total direct material cost ($2,000,000*70%)-$900,000	$   500,000

Direct material per unit ($500,000/400,000)	$   1.25
Direct labor per unit ($900,000/400,000)	$   2.25
Factory overhead per unit $600,000/400,000)	$   1.50

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