Question

4. If the conversion cost is $84 per unit, the prime cost is $55, and the manufacturing cost per unit is $105, what is the direct materials cost per unit? X per unit 5. Total manufacturing costs for August were $412,000. Prime cost was $64,000, and beginning WIP was $76,000. The cost of goods manufactured was $434,000. Calculate the cost of overhead for August and the cost of ending WIP. Cost of overhead for August Ending WIP

Answer 1

The direct materials cost per unit seems incorrect as it results in a negative figure. The cost of overhead for August is $348,000, and the cost of ending WIP is $54,000.

Step-by-step explanation:

To calculate the direct materials cost per unit, we use the given manufacturing cost per unit, prime cost, and conversion cost. The manufacturing cost comprises the prime cost, conversion cost, and direct materials cost. The formula to find the direct materials cost per unit is:

Direct Materials Cost per Unit = Manufacturing Cost per Unit - Prime Cost - Conversion Cost

Inserting the given values:

Direct Materials Cost per Unit = $105 - $55 - $84

The direct materials cost per unit is $-34, which indicates that there must be an error in the provided costs because direct materials cost cannot be negative.

To determine the cost of overhead for August and the cost of ending Work in Process (WIP), we consider the relationship between total manufacturing costs, prime cost, beginning WIP, and the cost of goods manufactured. The formula is:

Cost of Overhead = Total Manufacturing Costs - Prime Cost

Cost of Ending WIP = Total Manufacturing Costs + Beginning WIP - Cost of Goods Manufactured

After calculations we have:

Cost of Overhead = $412,000 - $64,000 = $348,000

Cost of Ending WIP = $412,000 + $76,000 - $434,000 = $54,000