Direct costs for 1 month of manufacturing 200 units of product Z: Material: $6,0

Question

Direct costs for 1 month of manufacturing 200 units of product Z:

                        Material:   $6,000

                        Labor hours:   200 hours

                        Machine hours:   100 hours

                        Rate of labor:   $30.00 per hour

                        Rate of machine:   $70.00 per hour

            Indirect Overhead Costs in a month:

                        Supervisor salary:   $50,000

                        Utilities:   $5000

                        Maintenance:   $3000

                        Space:   $4000

Additionally to product Z, the manufacturer manufactures product X. Product X has a total direct labor hours of 600 per month. Overhead costs are assigned to the products based on direct labor hours.

Determine the total cost per unit of product Z, consisting of direct material costs, direct labor costs, direct machine costs and overhead cost.

Explanation / Answer

Calculation of cost per unit of Z Total Per Unit Materail 6000 6000/200 30 Labour 6000 6000/200 30 Total Overheads 62000/800*200 15500 15500/200 77.5 Cost per Unit 137.5

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