Exercise D4-15 Lucy Sportswear manufactures a line of specialty T-shirts using a

Question

Exercise D4-15

Lucy Sportswear manufactures a line of specialty T-shirts using a job order costing system. In March the company incurred the following costs to complete Job ICU2: direct materials, $13,700, and direct labor, $4,800. The company also incurred $1,400 of administrative costs and $5,600 of selling costs to complete this job. Job ICU2 required 800 machine hours. Factory overhead was applied to the job at a rate of $25 per machine hour.

If Job ICU2 resulted in 7,000 good shirts, what was the cost of goods sold per shirt? (Round answer to 2 decimal places, e.g. 3.54.)

Explanation / Answer

Cost of goods sold per shirt = [$13,700 + $4,800 + (800 hours * $25)] / 7,000 shirts

Cost of goods sold per shirt = $38,500 / 7,000 shirts

Cost of goods sold per shirt = $5.50 per unit

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