a) The total manufacturing cost is $ 3125
b) The cost per skateboard is $ 25
<em><u>Solution:</u></em>
The company incurred direct materials costs of $1,150 and direct labor costs of $250
Direct material cost = $ 1150
Direct labor cost = $ 250
Overhead is applied using a rate of 150% of direct materials costs
Therefore,
Overhead cost = 150 % of 1150
![Overhead\ cost = 150 \% \times 1150\\\\Overhead\ cost = \frac{150}{100} \times 1150\\\\Overhead\ cost = 15 \times 115\\\\Overhead\ cost = 1725](https://tex.z-dn.net/?f=Overhead%5C%20cost%20%3D%20150%20%5C%25%20%5Ctimes%201150%5C%5C%5C%5COverhead%5C%20cost%20%3D%20%5Cfrac%7B150%7D%7B100%7D%20%5Ctimes%201150%5C%5C%5C%5COverhead%5C%20cost%20%3D%2015%20%5Ctimes%20115%5C%5C%5C%5COverhead%5C%20cost%20%3D%201725)
Total manufacturing cost = Direct material cost + Direct labor cost + overhead cost
Total manufacturing cost = 1150 + 250 + 1725 = 3125
Thus total manufacturing cost is $ 3125
<em><u>b. What is the cost per skateboard?</u></em>
Cost per skateboard = (Total manufacturing cost) ÷ (number of skateboards)
![Cost\ per\ skateboard = \frac{3125}{125} = 25](https://tex.z-dn.net/?f=Cost%5C%20per%5C%20skateboard%20%3D%20%5Cfrac%7B3125%7D%7B125%7D%20%3D%2025)
Thus cost per skateboard is $ 25