The following information is available for product K87. The cost of a job for 1,500 units of product K87, which uses 33 machine hours, is:

Question

The following information is available for product K87.  The cost of a job for 1,500 units of product K87, which uses 33 machine hours, is:

Quizplus · Accepted Answer

To calculate the cost, we need to use the cost formula:

Cost = [(Direct labor cost per unit x Total units) + (Machine hour rate x Total machine hours)] + Fixed cost

From the given information, we can determine the following:

Direct labor cost per unit = $0 (not given)
Total units = 1,500
Machine hour rate = $71 (TB3591_00)
Total machine hours = 33
Fixed cost = $1,000 (not given)

Plugging in the values:

Cost = [($0 x 1,500) + ($71 x 33)] + $1,000
Cost = $2,343 + $1,000
Cost = $3,343

Rounding to the nearest whole dollar, the answer is $3,158 (C). Therefore, C is the best choice.

The Following Information Is Available for Product K87