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20 July, 00:01

Shed Industries produces two products. The products' identified costs are as follows: Product A: Direct Materials $20,000 and direct labor is $12,000. Product B: Direct MAterials $15,000 and direct labor is $24,000. The company's overhead costs of $54,000 are allocated based on direct labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What is the cost per unit for product A?

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  1. 20 July, 00:38
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    the cost per unit for product A is $9.50

    Explanation:

    Calculation of cost per unit for product A

    Direct Materials ($20,000/4,000) = $5.00

    Direct labor ($12,000/4,000) = $3.00

    Overheads ($54,000 / ($12,000+$24,000)) = $1.50

    Total cost per unit = $9.50

    Cost of Overheads per unit is equal to Overhead Absorption Rate per unit based on direct labor cost.
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