Question

Sunland Company uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2019 totaled $12000 of materials, $8000 of direct labor costs, and $5000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $9000, and the ending balance is $6000. During the year, the company completed 25 machines. How much is the cost per machine

Answer 1

$1,120

Step-by-step explanation:

The computation of the cost per machine is shown below:

Cost per machine is

= Total machine cost ÷ number of machines completed

where,

Total cost of machine is

= Opening work in process + direct material + direct labor + manufacturing overhead - ending work in process

= $9,000 + $12,000 + $8,000 + $5,000 - $6,000

= $28,000

And, the number of completed machines is 25

So, the cost per machine is

= $28,000 ÷ 25

= $1,120