Sheddon Industries produces two products. The products' identified costs are as follows: Product A Product B Direct materials $ 20,000 $ 15,000 Direct labor 12,000 24,000 The company's overhead costs of $54,000 are allocated based on direct labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What is the cost per unit for product B?

Only Manufacturing Costs are used in Product Costing. Thus to find the Cost Per Unit of Product B, we Prepare a Manufacturing Cost Summary for Product B.

Step 1 Prepare a Manufacturing Cost Summary for Product B

Direct materials $ 15,000

Direct labor $24,000

Overhead costs($24,000/$36,000) × $54,000 $36,000

Total Cost for Product B $75,000

Step 2 Calculate the Cost Per Unit for Product B

Cost Per Unit = Total Cost / Number of Units Produced

= $75,000 / 5,000 units

= $ 15 per unit

fichoh fichoh · Answer 2 · 2020-03-24T12:50:06+01:00

Answer: $15

Explanation:

Given the following ;

Direct material cost for product B = $ 15,000

Direct labor cost for product B = $24,000

Direct labor for product A = $12,000

Allocated overhead based on direct labor cost = $54,000

Number of units of product B produced = 5000

Total product cost B = Direct labor cost of product B+ Direct material cost of product B+ overhead cost of product B

Overhead cost of product B based on direct labor cost = company's allocated overhead × (direct labor cost of product B ÷ Total direct labor cost of product A and B)

Total direct labor cost of product A and B = $12,000 + $24,000 = $36,000

Overhead cost of product B based on direct labor cost = $54,000 × ($24,000 / $36,000)

=$36,000

Total product cost B = $24,000 + $15,000 + $36,000 = $75,000

Therefore cost per unit if product B = Total costing of product B ÷ Number of units produced

= $75,000 ÷ 5000 = $15