Shed Industries produces two products. The products\' identified costs are as fo

Question

Shed Industries produces two products. The products' identified costs are as follows:

Product A

Product B

  Direct materials

$27,000      

$22,000      

  Direct labor

19,000      

31,000      

  
The company's overhead costs of $150,000 are allocated based on direct labor cost. Assume 11,000 units of product A and 10,000 units of Product B are produced. What is the cost per unit for product B?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

a. $14.60

b. $5.30

c. $15.00

d. None of these answers is correct.

Product A

Product B

  Direct materials

$27,000      

$22,000      

  Direct labor

19,000      

31,000      

Explanation / Answer

Total direct labor cost = 19000 +31000 = 50000

Overhead cost per direct labor cost = 150,000 / 50,000 = $ 3 per Direct labor cost

correct option is "A"

A B Direct material 27000 22000 Direct labor 19000 31000 Overhead 57000    [19000*3] 93000     [31000*3] Total cost 103000 146000 unit cost = Total cost /number of units 146,000 / 10000 = $ 14.60 per unit

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