Brown Company incurred costs of $20,000 for material, $10,000 for labor, and $16,000 for factory Overhead. There was no beginning or ending work in process. 5,000 units were completed and transferred out. The unit cost for material is:

Question

Business

Josiah Hardin

2 May, 13:22

Brown Company incurred costs of $20,000 for material, $10,000 for labor, and $16,000 for factory Overhead. There was no beginning or ending work in process. 5,000 units were completed and transferred out. The unit cost for material is:

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Answers (1)

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Ace Sherman · Answer 1

Unit cost of material is $4

Explanation:

Cost of production is the cost incurred during production of goods and services. Production cost is made up of the direct cost which include cost of material, and indirect cost such as labour and factory overhead. Total cost are then allocated to units produced to get the total amount spent per unit of the product.

However we were asked to calculate the unit cost of material, which is the direct input used in this production process.

Unit cost of material = Cost of material/number of units

Unit cost of material = 20,000/5,000

Unit cost of material = $4