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3 April, 08:59

At the beginning of the year, Rangle Company expected to incur $64,000 of overhead costs in producing 6,400 units of product. The direct material cost is $30 per unit of product. Direct labor cost is $40 per unit. During January, 600 units were produced. The total cost of the units made in January was:

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  1. 3 April, 10:01
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    The total cost of units made in January is $48,000

    Explanation:

    The total cost of the units made in January comprises of the direct material cost, direct labor cost as well as the production overhead cost, however, the total cost is analyzed and computed thus:

    Direct material cost ($30*600) = $18,000

    Direct labor cost ($40*600) = $24,000

    production overhead ($64,000/6400*600) = $6000

    Total cost of the units made in January $48,000

    The costs of the 600 units produced in the month of January is $48,000'

    As per the overhead, since 6400 units would cost $64,000 in overhead, 600 units would $64,000/6400*600=$6000
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