A company has identified the following overhead costs and co

A company has identified the following overhead costs and cost drivers for the coming year:

Budgeted direct labor cost was $135,600 and budgeted direct material cost was $381,680. The following information was collected on three jobs that were completed during the year:

If the company uses traditional costing and allocates overhead using direct labor cost, what is the cost of each unit of Job 102?

$491.80.

$379.50.

$611.80.

$354.30.

Solution

For 40 units of job 102 cost of

Direct Matirial = 10500

Direct Labor = 2400

Machine Setup = 27600 /230 *1 = 120

Inspection = 130200/4650 * 8 =224

Material Handling = 100800/6300 * 8 = 128

Engineering = 12600 /630 * 40 = 800

Total cost = 14172

Cost for 40 units = 14172

Cost for 1 unit = 14172 /40

= $ 354.30 ANSWER