Question

Waterway Sportswear manufactures a line of specialty T-shirts using a job order costing system. In March the company incurred the following costs to complete Job ICU2: direct materials, $13,700, and direct labor, $4,800. The company also incurred $1,490 of administrative costs and $5,400 of selling costs to complete this job. Job ICU2 required 790 machine hours. Factory overhead was applied to the job at a rate of $25 per machine hour.

If Job ICU2 resulted in 6,400 good shirts, what was the cost of goods sold per shirt?

Answer 1

Cost of goods sold per shirt = $5.98

Step-by-step explanation:

As per the data given in the question,

Direct material = $13,700

Direct labor = $4,800

Factor OH applied = 790×$25 = $19,750

Total production cost = $38,250

No. of units per job ICU2 = 6,400

Cost of goods sold per shirt =Total production cost ÷ No. of units per job ICU2

= $38,250 ÷ 6,400

= $5.98

Hence, Cost of goods per shirt = $5.98