Valutech Manufacturing uses job order costing for its production of MP3 players.

Question

Valutech Manufacturing uses job order costing for its production of MP3 players. The cost incurred for the current year for the production of the MP3 players totaled $12,000 of materials, $6,000 of direct labor costs, and $4,000 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 $10,000, and the ending balance is $6,000. During the year the company completed production for 400 MP3 players. What is the cost per unit for each MP3 player?

Explanation / Answer

Raw materials used in production 12000 Direct labor 6000 Manufacturing overhead applied to work in process inventory 4000 Total manufacturing costs 22000 Add: Beginning work in process inventory 10000 32000 Deduct: Ending work in process inventory 6000 Cost of goods manufactured 26000 Divided by units completed 400 Cost per unit 65 Option 3 $65 is correct

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