Question

Mickley Company’s plantwide predetermined overhead rate is $23.00 per direct labor-hour and its direct labor wage rate is $10.00 per hour. The following information pertains to Job A-500: Direct materials $ 200 Direct labor $ 50 Required: 1. What is the total manufacturing cost assigned to Job A-500? 2. If Job A-500 consists of 70 units, what is the unit product cost for this job? (Round your answer to 2 decimal places.)

Answer 1

a. The total manufacturing cost assigned to Job A-500 is $365

b. The unit product cost for Job A-500 is $5.21

Explanation:

a. The computation of the total manufacturing cost is shown below:

= Direct materials cost + direct labor cost + overhead cost

where,

Overhead cost = Predetermined overhead rate × (Direct labor ÷ direct labor wage rate)

= $23 × ($50 ÷ 10)

= $23 × 5

= $115

So,

= $200 + $50 + $115

=$365

b. The formula to be used for calculating the unit product cost which is shown below

= Total manufacturing cost ÷ number of units produced

= $365 ÷ 70 units

= $5.21 per unit of product cost