Figure 5 - 2 The Kraig 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 $60,000 for the year and the direct labor hours were estimated to be 15,000.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 Kraig 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 $60,000 for the year and the direct labor hours were estimated to be 15,000.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.
Total labor cost = Direct labor hours x Labor rate per hour
Labor rate per hour = Total budgeted factory overhead for the year / Total estimated direct labor hours = $60,000 / 15,000 = $4 per direct labor hour
Direct labor hours for Job XY5 = 2 hours per unit x 50 units = 100 hours
Total labor cost for Job XY5 = 100 hours x $4 per direct labor hour = $400
Labor cost per unit for Job XY5 = $400 / 50 units = $8 per unit
Therefore, the correct answer is B, $15.

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