Madison Inc. uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2017 totaled $18,000 of materials, $9,000 of direct labor costs, and $6,000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $15,000, and the ending balance is $9,000. During the year, the company completed 25 machines. How much is the cost per machine?

Question

Business

Octavio Bryan

30 June, 03:16

Madison Inc. uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2017 totaled $18,000 of materials, $9,000 of direct labor costs, and $6,000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $15,000, and the ending balance is $9,000. During the year, the company completed 25 machines. How much is the cost per machine?

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Answers (1)

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Kipper · Answer 1

The cost per machine will be $1,560.

Explanation:

Cost of materials is given at $18,000.

The cost of direct labor is $9000.

The manufacturing overhead cost is $6000.

Beginning work in process is $15,000.

The ending balance is $9000.

The number of machines completed is 25.

The total cost of making machines will be

=Cost of materials + cost of direct labor + manufacturing overhead cost+Beginning work in process-ending work in process

=$ (18000+9000+6000+15000-9000)

=$39,000

The cost per machine will be

=Total cost of making machines / number of machines

=$39,000/25

=$1,560