Question

EB2.

LO 6.1Boarders estimates overhead will utilize 160,000 machine hours and cost $80,000. It takes 4 machine hours per unit, direct material cost of $5 per unit, and direct labor of $5 per unit. What is the cost of each unit produced?

Answer 1

$12

Step-by-step explanation:

Overhead per machine hour = Overhead ÷ 160,000 machine hours

= $80,000 ÷ 160,000

= $0.5

Cost of each unit:

= Direct material + Direct labor + Overhead

= $5 + $5 + (machine hours per unit × Overhead per machine hour)

= $5 + $5 + (4 × $0.5)

= $5 + $5 + $2

= $12

Therefore, the cost of each unit produced is $12.