MS Company uses job order costing to determine the product unit cost of one of i

ID: 2479943 • Letter: M

Question

MS Company uses job order costing to determine the product unit cost of one of its products based on the following costs incurred during March: liability insurance, manufacturing, $3,500; rent, sales office, $3,000; depreciation, manufacturing equipment, $5,000; direct materials, $34,000; indirect labor, manufacturing, $3,600; indirect materials, $2,000; heat, light, and power, manufacturing, $2,500; fire insurance, manufacturing, $2,400; depreciation, sales equipment, $5,000; rent, manufacturing, $4,000; direct labor, $20,000; manager's salary, manufacturing, $4,800; president's salary, $6,000; sales commissions, $8,000; and advertising expenses, $3,000. The Inspection Department reported that 40,900 good units were produced during March. Determine the unit product cost.

Explanation / Answer

Calculation of unit product cost:

liability insurance, manufacturing

$ 3,500

Depreciation, manufacturing equipment

$ 5,000

Direct materials

$ 34,000

Indirect labor, manufacturing

$ 3,600

Indirect materials

$ 2,000

Heat, light, and power, manufacturing

$ 2,500

Fire insurance, manufacturing

$ 2,400

Rent, manufacturing

$ 4,000

Direct labor

$ 20,000

Manager's salary, manufacturing

$ 4,800

Total Production Costs (A)

$ 81,800

Good units produced during March (B)

40,900

Unit product cost = A/B =

$ 2