Question

ahedi Company manufactures a specialty line of silk-screened ties. The company uses a job-order costing system. During the month, the following costs were incurred on Job 1041: direct materials $54,800 and direct labor $19,200. In addition, selling and shipping costs of $28,000 were incurred on the job. Manufacturing overhead was applied at the rate of $25 per machine-hour (MH) and Job 1041 required 320 MHs. If Job 1041 consisted of 5,000 ties, the cost of goods sold per tie was:

Answer 1

The cost of goods sold per tie was $22

Explanation:

The list of all associated cost in a month on the job 1041 is

• Direct materials - $54,800
• Direct Labour - $19,200
• Selling $ Shipping Costs - $28,000
• Overhead costs - $25 per MH × 320MHs = $8,000

The total cost of production of the ties can then be obtained by adding all associated costs;

$54,800 + $19,200 + $28,000 + $8,000 = $110,000

Total units of ties made from Job 1041 is 5,000

Therefore,

`Cost per unit tie = (Total Cost of Production for all the Ties)/(Total number of Produced Ties)`

`Cost per unit tie = (110,000 dollars)/(5000)`

Cost per unit tie = $22