P. J.\'s Jump Ropes is planning to produce 2,000 boxes of jump ropes during June
ID: 2435812 • Letter: P
Question
P. J.'s Jump Ropes is planning to produce 2,000 boxes of jump ropes during June. Each box of jump ropes (1 unit) requires 75 feet of rope and 0.50 hours of direct labor. Rope costs $0.12 per foot and employees of the company are paid $11.00 per hour. Manufacturing overhead is applied at a rate of 150% of direct labor costs. P. J.'s has 15,000 feet of rope in beginning inventory and wants to have 20,000 feet of rope in ending inventory.Reference: Ref 10-1
How much manufacturing overhead will be charged to each box of jump ropes that P. J.'s produces?
What is the total cost per unit of the units produced in June?
Explanation / Answer
2,000 boxes of Jump Ropes would need 2,000 x 0.50 hours = 1,000 DLH
Cost of 1,000 DLH = 1,000 X $11 =$11,000
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