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26 December, 18:36

EcoSkate makes skateboards from recycled plastic. For a recent job lot of 100 skateboards, the company incurred direct materials costs of $600 and direct labor costs of $200. Overhead is applied using a rate of 150% of direct materials costs.

Required:

a. What is the total manufacturing cost of this job lot?

b. What is the cost per skateboard?

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Answers (1)
  1. 26 December, 22:12
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    Total cost = $2,000

    Unitary cost = 2 per unit

    Explanation:

    Giving the following information:

    Lot=100 skateboards

    Direct materials = $600

    Direct labor costs = $200

    Overhead is applied using a rate of 150% of direct materials costs.

    To calculate the total cost, first, we need to allocate overhead:

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

    Allocated MOH = 1.50*600 = $900

    Total cost = 900 + 200 + 900 = $2,000

    Unitary cost = total cost/number of units

    Unitary cost = 2,000/100 = $2 per unit
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Home » Business » EcoSkate makes skateboards from recycled plastic. For a recent job lot of 100 skateboards, the company incurred direct materials costs of $600 and direct labor costs of $200. Overhead is applied using a rate of 150% of direct materials costs.
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