Oriole Sportswear manufactures a line of specialty T-shirts using a job order costing system. In March the company incurred the following costs to complete Job ICU2: direct materials, $14,000, and direct labor, $4,400. The company also incurred $1,580 of administrative costs and $5,400 of selling costs to complete this job. Job ICU2 required 800 machine hours. Factory overhead was applied to the job at a rate of $25 per machine hour. If Job ICU2 resulted in 6,000 good shirts, what was the cost of goods sold per shirt

Question

Christine Harper

Business

30 December, 18:52

Oriole Sportswear manufactures a line of specialty T-shirts using a job order costing system. In March the company incurred the following costs to complete Job ICU2: direct materials, $14,000, and direct labor, $4,400. The company also incurred $1,580 of administrative costs and $5,400 of selling costs to complete this job. Job ICU2 required 800 machine hours. Factory overhead was applied to the job at a rate of $25 per machine hour. If Job ICU2 resulted in 6,000 good shirts, what was the cost of goods sold per shirt

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Answers (1)

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Moses · Answer 1

6.4

Explanation:

The computation of cost of goods sold per shirt is shown below:-

For computing the cost of goods sold per shirt first we need to find out the factory overhead applied and total production cost which is here below:-

Factory overhead applied = 800 * $25

= $20,000

Total Production cost = Direct material + Direct labor + Factory overhead applied

= $14,000 + $4,400 + $20,000

= $38,400

Per Unit Cost of Goods Sold = Total Production cost : Number of Units Per JOB ICU 2

= $38,400 : 6,000

= 6.4