O'Reilly Enterprises manufactures digital video equipment. For each unit $2,950 of direct material is used and there is $2,000 of direct manufacturing labor at $20 per hour. Manufacturing overhead is applied at $35 per direct manufacturing labor hour. Calculate the cost of each unit.

Question

Quizplus · Accepted Answer

Direct Material Cost = $2,950
Direct Manufacturing Labor Cost = $2,000 ($20 per hour x 100 hours)
Manufacturing Overhead Cost = $35 per hour x 100 hours = $3,500

Total Cost = Direct Material Cost + Direct Manufacturing Labor Cost + Manufacturing Overhead Cost
Total Cost = $2,950 + $2,000 + $3,500
Total Cost = $8,450

Therefore, the cost of each unit is $8,450. Option C is correct.

O'Reilly Enterprises Manufactures Digital Video Equipment