Summer company manufactures beach chairs. $ 4.00 of direct materials are needed for each chair. Labor is $ 15 an hour. The company manufactures 3 chairs per hour. Indirect costs are $ 9.00 per hour. Commissions to sellers are $ 2.00 per unit sold. The cost of a chair will be:
Summer company manufactures beach chairs. $ 4.00 of direct materials are needed for each chair. Labor is $ 15 an hour. The company manufactures 3 chairs per hour. Indirect costs are $ 9.00 per hour. Commissions to sellers are $ 2.00 per unit sold. The cost of a chair will be:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Summer company manufactures beach chairs. $ 4.00 of direct materials are needed for each chair. Labor is $ 15 an hour. The company manufactures 3 chairs per hour. Indirect costs are $ 9.00 per hour. Commissions to sellers are $ 2.00 per unit sold. The cost of a chair will be:
Expert Solution
Step 1
Cost of chair:
| Particulars | Amount $ |
| Direct material | 4 |
|
Labor ($15 per hour and 3 chairs manufactured in hour) (Therefore per chair = 15/3 =5) |
5 |
| Indirect cost
($9 per hour and 3 chairs manufactured in hour) (Therefore per chair = 9/3 =3) |
3 |
| Commission | 2 |
| Total cost per chair | 14 |
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