XYZ Company is a custom-made job order business. It currently received 5 jobs. O

Question

XYZ Company is a custom-made job order business. It currently received 5 jobs. Only Job No. 4 has to be completed before the end of the month. Therefore it is concentrating on it. Job 4 consists of 100 units and has the following manufacturing costs:
Direct Materials: $36,000
Direct Labor (750 hours): $45,000
Manufacturing Overhead is predetermined at 4 times the labor hourly rate. The rate is to be applied to Job 4 to complete it.

a What is the applied labor rate for Labor?

b. What is the Monetary Value of Factory Overhead?

c. What is the Total Product Cost?

d. What is the product cost per Unit completed?

e. What is the selling price if you mark the product 2 times what it cost you to produce?

Explanation / Answer

a)Applied labor rate = 45000/750 = $60 per hour

b)Factory overhead = 60*4= $240 per hour * 750 hour= 180000$

c)Total product cost = 36000+45000+180000. = 261000

d)Product cost per unit = 261000/100= 2610$

e) Selling price = 2610*2 = 5220$

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