Question

During the​ year, direct labor costs of​ $30,000 were​ incurred, manufacturing overhead totaled ​$42,000, materials purchased were​ $27,000, and selling and administrative costs were​ $22,000. Champagne sold​ 25,000 units of product during the year at a sales price of​ $5.00 per unit. What were the total manufacturing costs for the year assuming ​$2 comma 080 of indirect materials were used during the​ period?

Answer 1

Using the models for total manufacturing cost that includes just direct labour costs, direct materials cost and overhead costs, total manufacturing cost = $99,000

Using the model that includes selling and administrative costs & indirect materials cost, total manufacturing cost = $123,080

Step-by-step explanation:

Total manufacturing cost is a sum of the amount of cost incurred by a business to produce goods in a reporting period.

It usually consists of direct labour costs, direct materials cost and overhead costs.

In some models, the selling and administrative costs & cost of indirect materials are included.

Direct labour cost = $30,000

Manufacturing overhead costs = $42,000

Direct materials cost = $27,000

Total manufacturing cost = 30000 + 42000 + 27000 = $99,000

Selling and Administrative costs = $22,000

Indirect materials cost = $2,080

Total materials cost including selling and administrative costs & indirect materials cost = 99000 + 22000 + 2080 = $123,080

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