Madison Inc. uses job order costing for its brand new line of sewing machines. T

Question

Madison Inc. uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2011 totaled $18,000 of materials, $9,000 of direct labor costs, and $6,000 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 $15,000, and the ending balance is $9,000. During the year, the company completed 40 machines. How much is the cost per machine?

Explanation / Answer

Solution: cost per machine $975 Working Notes: materials 18000 direct labor costs, 9000 manufacturing overhead applied 6000 Beginning WIP balance 15,000 Less: Closing WIP -9,000 Total cost 39000 cost per machine = Total cost / no .of machines completed =39,000/40 =$975 Please feel free to ask if anything about above solution in comment section of the question.

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