Artsy Sportswear manufactures a specialty line of silk-screened T-shirts. The company uses a job-order costing system. During May, the manager incurred the following costs on Job PS4: direct materials $27,400 and direct labor $9,600. In addition, the manager incurred selling and shipping costs of $14,000. The manager applied manufacturing overhead at the rate of $25 per machine-hour and Job PS4 required 160 machine-hours. What was the cost of goods sold per shirt if Job PS4 consisted of 5,000 shirts?

Question

Business

Josephine Allen

13 January, 18:32

Artsy Sportswear manufactures a specialty line of silk-screened T-shirts. The company uses a job-order costing system. During May, the manager incurred the following costs on Job PS4: direct materials $27,400 and direct labor $9,600. In addition, the manager incurred selling and shipping costs of $14,000. The manager applied manufacturing overhead at the rate of $25 per machine-hour and Job PS4 required 160 machine-hours. What was the cost of goods sold per shirt if Job PS4 consisted of 5,000 shirts?

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Answers (1)

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Thalia Wiley · Answer 1

Cost of goods sold 37,400

Explanation:

The cost of goods sold will be the sum of the three main cost component:

direct materials, direct labor and manufacturing overhead. It is important ot notice the selling and shipping cost are not part of the cost of goods sold.

direct materials 27,400

direct labor 9,600

overhead cost 4,000 (A)

Total cost of goods sold 37,400

(A) The overhead is calcualte using a predeterminate rate:

$25 per machine hour

this job used 160 machine hour

hours x rate = overhead cost

160 hours x $25 = 4,000