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20 December, 18:22

EcoSkate makes skateboards from recycled plastic. For a recent job lot of 125 skateboards, the company incurred direct materials costs of $1,500 and direct labor costs of $250. Overhead is applied using a rate of 150% of direct materials costs. Required: a. What is the total manufacturing cost of this job lot? b. What is the cost per skateboard?

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  1. 20 December, 18:50
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    a. $4,000

    b. $32 per skateboard

    Explanation:

    a. The computation of the total manufacturing cost is shown below:

    = Direct material cost + Direct labor cost + overhead cost

    where,

    Overhead cost = 150% of direct materials costs

    = 150% * $1,500

    = $2,250

    And, the other items amount would remain the same

    = $1,500 + $250 + $2,250

    = $4,000

    b. The calculation of the cost per skateboard is shown below:

    = (Total manufacturing cost) : (number of skateboards)

    = $4,000 : 125 skateboards

    = $32
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Home » Business » EcoSkate makes skateboards from recycled plastic. For a recent job lot of 125 skateboards, the company incurred direct materials costs of $1,500 and direct labor costs of $250. Overhead is applied using a rate of 150% of direct materials costs.
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