Question

A bank issues credit cards to its eligible customers and processes them. It follows the process-costing system to record the costs incurred on credit card issuance and processing. Costs incurred during the month of October are as follows:

Direct labor$7,900Overhead$2,900Number of credit cards issued and processed1,200
Calculate the cost per credit card for October.

Answer 1

To find the cost per credit card for October, add the direct labor ($7,900) and overhead ($2,900) to get the total cost of $10,800. Divide this by the number of cards processed (1,200) to get a cost per card of $9.

Step-by-step explanation:

To calculate the cost per credit card for October, we need to combine the total costs and then divide by the number of credit cards issued and processed. The total costs include both direct labor and overhead expenses. Therefore, the total cost incurred in issuing and processing credit cards would be the sum of direct labor ($7,900) and overhead ($2,900), equaling $10,800 for October. Dividing this total cost by the number of credit cards issued and processed (1,200), we get the cost per credit card.

Step 1: Calculate total costs
Total costs = Direct labor + Overhead = $7,900 + $2,900 = $10,800

Step 2: Divide total costs by the number of credit cards issued
Cost per credit card = Total costs ÷ Number of credit cards = $10,800 ÷ 1,200 = $9

The cost per credit card for October is $9.