Question

2019 is the first year of operations for Disctech, a manufacturer of discs. During the first month, the company manufactured 650,000 discs. Listed below are some of Disctech’s cost data for the first month:

Per Unit
Raw Materials used $ 130,000 $0.20
Labor-assembly (paid according to piece rate (per disc) 84,500 $0.13
Labor-shipping to customers 39,000 $0.06
Rent-factory 13,000 $0.02
Rent-warehouse for finished goods held for shipping 6,500 $0.01
Production supervisor salary 6,500 $0.01
Other fixed production costs 45,500 $0.07
Other fixed general and administrative costs 13,000 $0.02
Total Costs $ 338,000
Required:
a) Based on the above information, what is the product unit cost of a disk under GAAP?

Answer 1

a. The product unit cost of a disk under GAAP is $0.43

Step-by-step explanation:

a. According to the given data we have the following:

direct material cost = $0.20

direct labor cost = $0.13

To calculate the product unit cost of a disk under GAAP we would have to use the following formula:

product unit cost = direct mat cost + direct lab cost + fixed overhead cost

fixed overhead = rent factory + production supervision salary + other fixed production cost = 0.02+0.01+0.07 = $0.10

Therefore, product unit cost = 0.20+0.13+0.10= $0.43