Harms Shoe Company applies manufacturing overhead based on the number of units as the cost driver.Information concerning costs for July follows:
$\begin{array}{ll}
\text { Direct labor costs } & 800 \text { hours @ \$14 } \
\text { Manufacturing overhead } & \$ 8,000 \
\text { Direct materials } & \$ 45,000
\end{array}$
How much is the unit product cost if 1,000 units are produced?
A)$8.00
B)$64.20
C)$53.00
D)$45.00

Question

Quizplus · Accepted Answer

The unit product cost is calculated by adding together the direct materials, direct labor, and manufacturing overhead costs, and then dividing by the number of units produced. Direct materials cost is $45,000, direct labor cost is $800 hours * $14/hour = $11,200, and manufacturing overhead is $8,000. The total cost is $45,000 + $11,200 + $8,000 = $64,200. Dividing this by the number of units (1,000) gives a unit product cost of $64.20.

Harms Shoe Company Applies Manufacturing Overhead Based on the Number