Question

Weaver Company’s predetermined overhead rate is $20.00 per direct labour-hour, and its direct labour wage rate is $15.00 per hour. The following information pertains to Job A-200:

Direct materials	$520
Direct labour	$390

Required:

1.	What is the total manufacturing cost assigned to Job A-200?

     

2.	If Job A-200 consists of 55 units, what is the average cost assigned to each unit included in the job?

  

Answer 1

1)
	Manufacturing cost assigned to Job A-200				$      1,430
Working:
a.	Direct Materials				$        520
	Direct Labor				$        390
	Manufacturing overhead				$        520
	Manufacturing costs				$      1,430
b.	Direct Labor hours		=	Direct Labor costs/ Direct Labor wage rate
			=	$        390	/	$      15.00
			=	26
c.	Manufacturing overhead		=	Direct Labor hours* Overhead recovery rate
			=	26	x	$          20
			=	$        520
2)	Average cost each unit			$      26.00
Working:
	Average cost each unit		=	Total Manufacturing costs/Total Units
			=	$      1,430	/	55
			=	$      26.00