Question

Crane Company uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2019 totaled $8000 of materials, $4000 of direct labor costs, and $1000 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 $5000, and the ending balance is $4000. During the year, the company completed 25 machines. How much is the cost per machine?

Answer 1

Answer:

$560

Explanation:

Add all the costs:

Materials $8,000

Labor $4,000

Overhead $1,000

And we will get the Total Manufacturing Cost of $13,000.

Then, add the Beginning Work in process of $5,000 to get the Cost of goods put into process of $18,000.

Now, deduct the Ending Work in process of $4,000 to get the Cost of goods manufactured of $14,000.

Since they promptly ships the goods, the $14,000 will automatically be the Cost of Goods Sold.

Finally, to get the cost per machine, just divide $14,000 by the 25 machines and we will get the $560 cost per machine.