EcoSkate makes skateboards from recycled plastic. For a recent job lot of 125 skateboards, the company incurred direct materials costs of $1,500 and direct labor costs of $250. Overhead is applied using a rate of 150% of direct materials costs. Required: a. What is the total manufacturing cost of this job lot? b. What is the cost per skateboard?

a. $4,000

b. $32 per skateboard

Explanation:

a. The computation of the total manufacturing cost is shown below:

= Direct material cost + Direct labor cost + overhead cost

where,

Overhead cost = 150% of direct materials costs

= 150% * $1,500

= $2,250

And, the other items amount would remain the same

= $1,500 + $250 + $2,250

= $4,000

b. The calculation of the cost per skateboard is shown below:

= (Total manufacturing cost) : (number of skateboards)

= $4,000 : 125 skateboards

= $32