In 2014, Brunswick Plumbing Supplies planned the following:
Factory overhead costs $180 000
Direct labour costs (15 000 hours at $8.00 per hour) $120 000
Machine Hours 48 000
Direct material costs $108 000
The predetermined overhead rate is based on direct labour hours and planned production during 2014 is 12 000 units. The estimated cost per unit produced is:

Question

Quizplus · Accepted Answer

To find the predetermined overhead rate, we divide the total estimated overhead costs by the total estimated direct labour hours:
Predetermined overhead rate = $180,000 / 15,000 hours
Predetermined overhead rate = $12 per direct labour hour

To find the overhead cost for one unit of production, we multiply the predetermined overhead rate by the direct labour hours required to produce one unit:
Overhead cost per unit = $12 per direct labour hour x (direct labour hours per unit)
The question does not give us the direct labour hours per unit, but we can calculate it using the total direct labour hours and the planned production:
Direct labour hours per unit = Total direct labour hours / Planned production
Direct labour hours per unit = 15,000 hours / 12,000 units
Direct labour hours per unit = 1.25 hours per unit

Now we can calculate the overhead cost per unit:
Overhead cost per unit = $12 per direct labour hour x 1.25 direct labour hours per unit
Overhead cost per unit = $15 per unit

To find the total cost per unit, we add together the direct material costs, direct labour costs, and overhead costs per unit:
Total cost per unit = Direct material cost per unit + Direct labour cost per unit + Overhead cost per unit
Total cost per unit = $9 + ($8 per direct labour hour x 1.25 direct labour hours per unit) + $15 per unit
Total cost per unit = $9 + $10 + $15 per unit
Total cost per unit = $34 per unit.

Therefore, the answer is C.

In 2014, Brunswick Plumbing Supplies Planned the Following