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 plant-wide rate of $13 per direct labor hour. Direct 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 Cost Per Unit. The Answer is $11.45, Please Show your work on getting to the answer clearly

Explanation / Answer

Compute the Cost Per Unit.

Direct Materials               $40,000
Direct Labor Costs
Dept A                            $60,000
Dept B                          $12,000
Overhead costs
Dept. A 7,500 x $13       $97,500
Dept. A 1,500 x $13       $19,500
Total costs                  $229,000
Units produced              20,000
Cost per unit               $11.45

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