Tool Time Inc. uses job order costing for its brand new line of homework machine
ID: 2420760 • Letter: T
Question
Tool Time Inc. uses job order costing for its brand new line of homework machines. The cost incurred for production during 2010 totaled $6,000 of materials, $3,000 of direct labor costs, and $2,000 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 the year. Beginning work in process totaled $5,000, and the ending balance is $3,000. During the year, the company completed 40 machines. How much is the cost per machine?
Explanation / Answer
opening balance of WIP 5000 DIRECT MATERIAL 6000 DIRECT LABOUR 3000 DIRECT MANUFACTURING OVERHEADS 2000 SUBSTRACT CLOSING BALANCE OF WIP -3000 Total cost of production 13000 No of Units 40 Per unit cost 325