Keyes Company manufactured 1,000 widgets for $35 per unit.The material cost assigned to each unit is $12.Direct labor accounts for 25% of the total manufacturing cost.What is the per-unit cost of manufacturing overhead?

Question

Quizplus · Accepted Answer

The total cost of manufacturing each unit can be calculated as follows:
Direct material cost per unit = $12 
Direct labor cost per unit = 25% of ($35 - $12) = 0.25 x $23 = $5.75 
Total manufacturing cost per unit = Direct material cost + Direct labor cost + Manufacturing overhead cost 
Manufacturing overhead cost per unit = Total manufacturing cost per unit - Direct material cost per unit - Direct labor cost per unit 
Manufacturing overhead cost per unit = ($35 + Manufacturing overhead cost per unit) - $12 - $5.75 
Manufacturing overhead cost per unit = $17.25 - Manufacturing overhead cost per unit 
2 x Manufacturing overhead cost per unit = $17.25 
Manufacturing overhead cost per unit = $8.625 ≈ $8.75 (rounded to the nearest cent)

Therefore, the per-unit cost of manufacturing overhead is $8.75 (Choice A).

Keyes Company Manufactured 1,000 Widgets for $35 Per Unit