Question

Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates only to one customer's lean cell for the coming year. Projected labor and overhead, $5,380,200; materials costs, $26 per unit. Planned production included 5,856 hours to produce 18,300 motor drives. Actual production for August was 1,890 units, and motor drives shipped amounted to 1,480 units. From the foregoing information, determine the production costs transferred to Cost of Goods Sold during August O a. $604,800 b. $473,600 c. $222,784 Od. $557,576

Answer 1

Labor and overhead cost per hour = Total projected cost / Total hours = $5,380,200/5,856 Hours = $918.75 Per hour Labor hours required per unit = Total projected hours/Total projected units = 5,856 Hours / 18,300 Units = 0.32 Hours per unit Number of units shipped = 1,480 Units Total labor and overhead cost for shipped goods = 1,480 Units * 0.32 hours per unit * $918.75 Per unit = $435,120 Total material cost = 1,480 Units * $26 Per unit = $38.480 Total cost of goods sold = Total material cost + Total labor and overhead cost = $38,480 + $435,120 = $473,600 Ans : Cost of goods sold = $473,600