Freshy Milk Company produces dairy equipment. Most of its jobs have a number of units per job. The company has two different departments through which all jobs pass. Overhead is applied using a plant wide rate of $15 per direct labor hour. Direct labor wages average $6 an hour. Data for Job #3 for the year is: Direct materials $30,000 Direct labor costs Dept. A $50,000 Dept. B 10,000 Machine hours used Dept. A 300 hrs. Dept. B 3,100 hrs. Units produced 34,000 units Compute the cost per unit. (Note: Round the unit cost to two decimal places.) a.$7.06 b.$6.32 c.$3.50 d.$10.05 e.None of these choices are correct.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
| Direct materials | $30,000 |
| Direct labor costs | |
| Dept. A | $50,000 |
| Dept. B | 10,000 |
| Machine hours used | |
| Dept. A | 300 hrs. |
| Dept. B | 3,100 hrs. |
| Units produced | 34,000 units |
Compute the cost per unit. (Note: Round the unit cost to two decimal places.)
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