At the beginning of the year,Rangle Company expected to incur $54,000 of overhead costs in producing 6,000 units of product.The direct material cost is $20 per unit of product.Direct labor cost is $30 per unit.During January,600 units were produced.The total cost of the units made in January was:
A) $30,000
B) $5,400
C) $35,400
D) None of the answers are correct.

Question

Quizplus · Accepted Answer

To calculate the total cost of the units made in January, we need to consider three costs: direct material cost, direct labor cost, and overhead cost.

Direct material cost per unit = $20 
Direct labor cost per unit = $30

Total direct cost per unit = $50 ($20 + $30)

Total cost of units made in January = Total direct cost per unit x Number of units produced in January

= $50 x 600 units = $30,000

Now, we need to also consider the overhead cost. The overhead cost is applied based on the expected overhead cost and the number of units expected to be produced in total for the year.

Overhead cost per unit = Expected overhead cost / Expected number of units

Overhead cost per unit = $54,000 / 6,000 units = $9

Total cost per unit = Direct cost per unit + Overhead cost per unit

Total cost per unit = $50 + $9 = $59

Total cost of units made in January (considering overhead cost) = Total cost per unit x Number of units produced in January

= $59 x 600 units = $35,400

Therefore, the correct answer is C, $35,400.

At the Beginning of the Year,Rangle Company Expected to Incur