Question

Andrews Company manufactures a line of office chairs. Each chair takes $18 of direct materials and uses 1.9 direct labor hours at $18 per direct labor hour. The variable overhead rate is $1.00 per direct labor hour, and the fixed overhead rate is $1.50 per direct labor hour. Andrews expects to have 640 chairs in ending inventory. There is no beginning inventory of office chairs.
Prepare a cost of goods sold budget for Andrews Company.

Answer 1

Answer:

See below

Explanation:

Direct materials :

$18

Direct labor :

1.9 hours × $18 labor costs

$34.2

Overhead

1.9 labor hours × ($1.50 fixed rate + $1.0 variable rate)

$4.75

Total unit cost

$18 + $34.2 + $4.75

$56.95

Cost to produce 640 chairs :

640 chairs × $56.95 per chair = $36,448