Question

Wilson Products computes its predetermined overhead rate on the basis of direct labor-hours. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. This job involved production of 50 audio controllers. The company uses a predetermined overhead rate of $10 per direct labor-hour. If Job X23 involved 100 hours of actual direct labor, what is the unit product cost?

Answer 1

The unit product cost for Job X23 is $124 per audio controller, calculated by adding the total direct materials, direct labor, and applied overhead costs, and then dividing by the number of units produced.

Step-by-step explanation:

To calculate the unit product cost for Job X23, which involves the production of audio controllers, we need to follow a series of steps that take into account the direct materials, direct labor, and applied overhead based on the given predetermined overhead rate. The predetermined overhead rate is $10 per direct labor-hour, and we have 100 hours of actual direct labor for this job. The product cost calculation is as follows:

• Calculate the total direct material cost, which is given as $4,000.
• Calculate the total direct labor cost by multiplying the number of labor hours (100) by the direct labor cost per hour ($10), resulting in $1,200.
• Compute the total applied overhead by multiplying the predetermined overhead rate ($10) by the actual labor hours (100), which gives us $1,000.
• Add these three components to get the total job cost: $4,000 (materials) + $1,200 (labor) + $1,000 (overhead) = $6,200.
• Finally, divide the total job cost by the number of units produced (50) to find the unit product cost: $6,200 / 50 = $124 per unit.

Therefore, the unit product cost of Job X23 is $124 per audio controller.