Question

1. Using the following information answer the question listed below.

ABC corp needs to figure out cost information pertaining to product D.

Direct labor                      $60,000

Direct Materials              45% of OH

Overhead                         92% of direct labor

Number of products produced   400 units

What is the cost of direct materials?

What is the cost of overhead?

What is the total cost of production?

What is the per unit cost?

What is the total prime cost?

What is the per unit prime cost?

What is the total conversion cost?

What is the per unit conversion cost?

What would be the selling price per unit if I need a 35% markup?

2. Using the following please answer the questions below.

Direct materials                             $35,000

Direct Labor                                   3,500 hours @ $14.00 per hour

Overhead                                        65% of Direct materials

Total units produced                    700

What is the total prime cost?

What is the per unit conversion cost?

What would the selling price per unit if you need 45% markup?

Answer 1

Question 1:
Data given in the question:
Direct labor	$60,000
Direct Materials	45% of OH
Overhead	92% of direct labor
Number of products produced	400 units
Cost of overhead
= 92% of $60,000 = $55,200
Cost of direct materials
= 45% of $55,200 = $24,840
Total cost of production
= Direct materials cost + Direct labor cost + Cost of overhead
= $24,840 + $60,000 + $55,200 = $140,040
Per unit cost
= Total cost of production / Number of units produced
= $140,040 / 400 units = $350.10 per unit
Total prime cost
= Direct materials cost + Direct labor cost
= $24,840 + $60,000 = $84,840
Per unit prime cost
= Total prime cost / Number of units produced
= $84,840 / 400 units = $212.10 per unit
Total conversion cost
= Direct labor cost + Cost of overhead
= $60,000 + $55,200 = $115,200
Per unit conversion cost
= Total conversion cost / Number of units produced
= $115,200 / 400 units = $288 per unit
Selling price per unit with a 35% markup
= Total cost per unit + 35% of total cost per unit
= $350.10 + 35% of $350.10
= $472.635
Question 2:
Data given in the question:
Direct materials	$35,000
Direct Labor	3,500 hours @ $14.00 per hour
Overhead	65% of Direct materials
Total units produced	700 units
Total prime cost
= Direct materials cost + Direct labor cost
= $35,000 + (3,500 hours x $14 per hour)
= $35,000 + $49,000 = $84,000
Per unit conversion cost
= Total conversion cost / Number of units produced
= $71,750 / 700 units = $102.50 per unit
Calculation of conversion cost:
Conversion cost = Direct labor cost + Cost of overhead
=> Conversion cost = $49,000 + (65% of $35,000)
=> Conversion cost = $49,000 + $22,750 = $71,750
Selling price per unit with a 45% markup
= Total cost per unit + 45% of total cost per unit
= $152.50 + (45% of $152,50) = $221.125
Calculation of total cost per unit:
Total cost per unit = (Direct materials cost + Direct labor cost + Cost of overhead) / Total number of units
=> Total cost per unit = ($35,000 + $49,000 + $22,750) / 700 units = $152.50