Laudermilk produces dairy equipment. Most of its jobs have a number of units per

Question

Laudermilk produces dairy equipment. Most of its jobs have a number of units per job. The company has two different departments through which all jobs pass. Overhead is applied using a plantwide rate of $13 per direct labor hour. Direct Labor wages average $8 an hour. Data for Job #3 for the year is: Direct Materials $40,000 Direct Labor Costs Dept. A 60,000 Dept. B 12,000 Machine hours used Dept. A 200 Dept. B 2,400 Units Produced 20,000 Compute the total cost of Job #3. Answer $229,000 $112,000 $134,600 $145,800 $231,600

Explanation / Answer

I believe the answer given above is incorrect and without working. My explanation is as follows; Total direct labor costs = 60000 + 12000 = 72000 hours Total direct labor hours = 72000/8 = 9000 hours Overhead applied = 9000 x 13 = $117,000 Total product cost = 40000 + 60000 + 12000 + 117000 = $229000 Product cost per unit = 229000/20000 = $11.45 Hope my explanation helps!

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