Question

Current Attempt in Progress Crane Company uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2017 totaled $8000 of materials, $4000 of direct labor costs, and $1000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $5000, and the ending balance is $4000. During the year, the company completed 25 machines. How much is the cost per machine? $560 $480 $720 $520 Attempts:0 of 1 used Submit Answer Save for Later

Answer 1

The correct answer will be option (a) $560. It is because of the following calculation:

Cost of sewing machines manufactured= Materials+ Direct Labor Cost+ Manufacturing Overhead+(Beginning Work in progress- Ending Work in progress)

=$8,000+$4,000+$1,000+($5,000-$4,000)

=$13,000+$1,000

=$14,000

Cost per machine= Cost of sewing machines manufactured/ Number of machines completed

=$14,000/25

=$560

The other options (b) ,(c) and (d) are not correct because of the above reason.