Your client, a factory that produces chips and salsa, uses traditional costing, and you are attempting to calculate total cost per unit. They have the following costs (same for each item): Direct Materials (DM), $56,280; Direct Labor (DL), $63,460; and their Manufacturing Overhead (MOH) will be 82% of their DL cost. They produced 33,470 units of glass salsa jars and 42,000 packets of chips during the period. What is their total cost per unit for salsa?
A) $4.09
B) $4.36
C) $5.13
D) $5.47

Question

Quizplus · Accepted Answer

This question requires you to calculate total cost per unit for salsa under traditional costing which entails first calculating total product costs correctly. $5.13 (Choice C) correctly added together the DM of $56,280, DL of $63,460, and MOH of $52,037.20 ($63,460 × 0.82) for a total product cost of $171,777.20. Then, this number is divided by the units of salsa (33,470) to arrive at the correct total cost per unit of salsa.

Your Client, a Factory That Produces Chips and Salsa, Uses