Question

Sheddon Industries produces two products. The products' identified costs are as follows: Product A Product B Direct materials $ 30,000 $ 25,000 Direct labor 16,000 34,000 The company's overhead costs of $60,000 are allocated based on labor cost. Assume 14,000 units of product A and 15,000 units of Product B are produced. What amount of production costs would be assigned to Product A

Answer 1

$66,800

Step-by-step explanation:

The computation of the amount of production cost assigned to product A but before that first we have to calculate the overhead rate which is shown below:

Overhead rate = Overhead Cost ÷ Total Labor Cost

= $60,000 ÷ ($30,000 + $16,000)

= $1.30

Now

Overhead Cost assigned to product A is

= $1.30 × $16,000

= $20,800

So, the Production costs assigned to product A is

= Direct Materials cost + Direct Labor cost + Overhead Cost

= $30,000 + $16,000 + $20,800

= $66,800