Question

Fickel Company has two manufacturing departments—Assembly and Testing & Packaging. The predetermined overhead rates in Assembly and Testing & Packaging are $16.00 per direct labor-hour and $12.00 per direct labor-hour, respectively. The company’s direct labor wage rate is $20.00 per hour. The following information pertains to Job N-60:

	Assembly				Testing & Packaging
Direct materials	$	340			$	25
Direct labor	$	180			$	40

Required:

1. What is the total manufacturing cost assigned to Job N-60?

2. If Job N-60 consists of 10 units, what is the unit product cost for this job?

Answer 1

1.

Total manufacturing cost includes cost of Assembly and Traininng & Packaging.

which includes total cost as = Material cost + Labor Cost + Overheads.

Further Ovehead cost is at predetermined rates of direct labor hour, so we need to get the labor hours.

For Assembly :

Direct Labor cost = $ 180 , and per labor hour rate = $20 per hour.

Thus Labor hours = Direct Labor Cost / Rate per hour = $ 180 / $20 = 9 hours.

So Overhead = Labor Hours * Predermined rate = 9 hours * $ 16 = $ 144.

For Testing and Packaging :

Direct Labor cost = $ 40 , and per labor hour rate = $20 per hour.

Thus Labor hours = Direct Labor Cost / Rate per hour = $ 40 / $20 = 2 hours

So Overhead = Labor Hours * Predermined rate = 2 hours * $ 12 = $ 24.

Based on above calculation the total Manufacturing cost assigned to Job N-60.

	Assembly	Testing & Packaging	Total Cost
Direct Material	$340	$25	$365
Direct Labor	$180	$40	$220
Overheads	$144	$24	$168
Total Manufacturing Cost.			$753

Thus the total Manufacturing cost assigned to Job N-60 = $ 753.

2.If Job N-60 consists of 10 units, what is the unit product cost for this job?

Here the total cost = $ 753 , and units in Job N-60 = 10 units.

Thus unit product cost = Total Cost / total units = $ 753 / 10 = $ 75.30

Thus the unit product cost for this job = $ 75.30