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Question

 Last month, direct materials, electronic components, etc., costing $600,000 were put into production. Direct labor of $900,000 was incurred, manufacturing overhead equaled $600,000, and selling and administrative costs totaled $400,000. The company manufactured 9,000 mobiles during the month. Assume that there were no beginning or ending work in process balances. Calculate the total product cost.

Answer 1

The Total Direct Cost will be the sum of Material, Labor, Selling, and Administrative costs.

 

That total will be $1,900,000

 

The Fully Burdened Cost will be Direct Costs + Overhead expense

 

That total will be $1,900,000 + 600,000 = $2,500,000

 

The number of units produced is not a relevant figure in these calculations, but it can be used to determine the unit cost.