Vahedi Company manufactures a specialty line of silk-screened ties. The company
ID: 2414926 • Letter: V
Question
Vahedi Company manufactures a specialty line of silk-screened ties. The company uses a job-order costing system. During the month, the following costs were incurred on Job 1041: direct materials $54,800 and direct labor $19,200. In addition, selling and shipping costs of $28,000 were incurred on the job. Manufacturing overhead was applied at the rate of $25 per machine-hour (MH) and Job 1041 required 320 MHs. If Job 1041 consisted of 5,000 ties, the cost of goods sold per tie was:
Vahedi Company manufactures a specialty line of silk-screened ties. The company uses a job-order costing system. During the month, the following costs were incurred on Job 1041: direct materials $54,800 and direct labor $19,200. In addition, selling and shipping costs of $28,000 were incurred on the job. Manufacturing overhead was applied at the rate of $25 per machine-hour (MH) and Job 1041 required 320 MHs. If Job 1041 consisted of 5,000 ties, the cost of goods sold per tie was:
Explanation / Answer
Cost of goods sold wil include only the manufacturing cost ie the cost related to the production or manufacturing process like Direct Material & Direct Labour and it would also include the any Overheads related to Manufacturing . However it will not include cost which are not related to manufacturing like selling and distribution cost or Administrative cost therefore selling and shipping costs of $28,000 given here will not be considered for calculating Cost of the Goods sold .
A Direct Material ( given) 54800 B Direct Labor ( given) 19200 C Selling and Shipping costs ( given) 28,000 D Manufacturing overhead per machine-hour ( given) 25 E Total Machine Hours ( given) 320 F Total Manufacturing Overheads ( D x E ) 8000 G Total Cost of goods sold ( A + B + F ) 82000 H Number of Units ( Tie ) manufactured ( given) 5000 I Cost of goods sold per tie ( G / H ) 16.4Related Questions
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