Mega Manufacturing produces wooden chairs. The cutting department produces all o
ID: 2470791 • Letter: M
Question
Mega Manufacturing produces wooden chairs. The cutting department produces all of the component parts and transfers the parts to the assembly department. The assembly department had no work in process at the beginning of the month and had two jobs started during the month. Since materials are transferred in, all materials are charged to each job at the beginning of the job. The materials cost is $17.50 per chair. Assembly time is 20 minutes per chair and the direct labor rate is $15 per hour. Overhead is charged to a job only when a job is completed and ready to transfer to finished goods. The overhead is applied on a per-chair basis at a rate of $6 per chair. Job No. 1 was for 1,000 chairs, and it was started and completed during the month. Job No. 2 was for 1,500 chairs, and it was 60% complete at month end. Calculate the costs to complete Job No. 1 and the unit cost per chair. Calculate the costs charged as of month's end and the equivalent units of production for Job No. 2.
Explanation / Answer
Answer 1. Calculation of Cost of Job No. 1 Cost per Unit Total Cost Material Costs 17.50 17,500 Direct Labor 5.00 5,000 Overhead Applied 6.00 6,000 Total 28.50 28,500 Answer 2. Material Labor Total No. of Units Started in Job No 2 1,500 1,500 % Completed 100% 60% Equivalent Units 1,500 900 Cost per unit 17.50 5.00 Total Cost 26,250 4,500 30,750 Ovrehead Cost is not Applied since the Job No 2 is not Completed.