Figure 5 - 2 The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5:
Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units.
Refer to Figure 5-2. What is the labor cost per unit for Job XY5?

Question

Figure 5 - 2 The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5:
 Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units.
Refer to Figure 5-2. What is the labor cost per unit for Job XY5?

Quizplus · Accepted Answer

To find the labor cost per unit for Job XY5, we need to divide the total labor cost by the number of units produced. We are not given the total labor cost, but we can calculate it using the plant-wide overhead rate:

Plant-wide overhead rate = Budgeted factory overhead / Estimated direct labor hours
Plant-wide overhead rate = $80,000 / 20,000 direct labor hours
Plant-wide overhead rate = $4 per direct labor hour

We know that Job XY5 consists of 50 units, so we need to find the total direct labor cost for this job:

Total direct labor cost = Direct labor hours for Job XY5 x Direct labor rate
Total direct labor cost = 25 hours x $4 per hour
Total direct labor cost = $100

Finally, we can calculate the labor cost per unit for Job XY5:

Labor cost per unit = Total direct labor cost / Number of units
Labor cost per unit = $100 / 50 units
Labor cost per unit = $2

Therefore, the correct answer is B, $15 per unit.

Figure 5 - 2 the Cameron Corporation Manufactures Custom-Made Purses