Question

Orinder Company provided the following information for the last calendar year:

Beginning inventory:
Direct materials $19,300
Work in process $41,200
-Ending inventory:
Direct materials $16,000
Work in process $30,600
During the year, direct materials purchases amounted to $275,800, direct labor cost was $153,000, and overhead cost was $267,300. There were 25,000 units produced. Unit manufacturing cost (rounded to the nearest cent) is:
a.$28.40
b.$27.55
c.$34.95
d.$27.98

Answer 1

To find the unit manufacturing cost, total up direct materials used, direct labor, overhead costs and subtract ending work in process. Divide this figure by the number of units produced to get $28.40 per unit.

Step-by-step explanation:

To calculate the unit manufacturing cost, we need to sum up the total manufacturing costs and divide by the number of units produced. The calculation is as follows:

• Total Direct Materials Used = Beginning Inventory of Direct Materials + Direct Materials Purchases – Ending Inventory of Direct Materials = $19,300 + $275,800 – $16,000 = $279,100
• Total Work in Process = Beginning Work in Process Inventory + Total Manufacturing Costs (Direct Materials Used + Direct Labor + Overhead) - Ending Work in Process Inventory = $41,200 + $279,100 + $153,000 + $267,300 - $30,600 = $710,000
• Unit Manufacturing Cost = Total Work in Process / Number of Units Produced = $710,000 / 25,000 = $28.40

The unit manufacturing cost rounded to the nearest cent is $28.40, which corresponds to option (a).