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, $13,200, and direct labor, $4,900. The company also incurred $1,230 of administrative costs and $6,000 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 6,400 good shirts, what was the cost of goods sold per shirt? (Round answer to 2 decimal places, e. g. 3.54.)

Question

Business

Keon Romero

21 October, 23:29

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, $13,200, and direct labor, $4,900. The company also incurred $1,230 of administrative costs and $6,000 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 6,400 good shirts, what was the cost of goods sold per shirt? (Round answer to 2 decimal places, e. g. 3.54.)

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Answers (1)

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Bronson Malone · Answer 1

Unitary cost of goods sold = $5.95

Explanation:

Giving the following information:

direct materials = $13,200

direct labor = $4,900

Job ICU2 required 800 machine hours.

Factory overhead was applied to the job at a rate of $25 per machine hour.

The cost of goods sold is calculated using the direct material, direct labor, and applied factory overhead.

First, we need to calculate the allocated overhead:

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Allocated MOH = 25*800 = 20,000

Now, we need to calculate the cost of goods sold per unit:

Total cost = 13,200 + 4,900 + 20,000 = 38,100

Unitary cost = 38,100/6,400 = $5.95

Unitary cost of goods sold = $5.95