Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour, and the fixed overhead rate is $1.60 per direct labor hour. Andrews expects to have 675 chairs in ending inventory. There is no beginning inventory of office chairs.

Calculate the unit product cost. (Note: Round to the nearest cent.)

Question

Business

Ellis Jensen

15 April, 05:55

Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour, and the fixed overhead rate is $1.60 per direct labor hour. Andrews expects to have 675 chairs in ending inventory. There is no beginning inventory of office chairs.

Calculate the unit product cost. (Note: Round to the nearest cent.)

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Alonzo Mendoza · Answer 1

Unitary cost = $49.72

Explanation:

Giving the following information:

Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour, and the fixed overhead rate is $1.60 per direct labor hour.

The unitary cost under absorption costing is the sum of direct material, direct labor, and total overhead.

Unitary cost = 14 + (1.9*16) + (1.2*1.9) + (1.6*1.9) = $49.72