Question

Sonic, Inc. is planning to produce 2,500 units of product in 2016. Each unit requires 3 pounds of materials at $6 per pound and a half hour of labor at $16 per hour. The overhead rate is 75% of direct labor.
Required:
a. Compute the budgeted amounts for 2016 for direct materials to be used, direct labor, and applied overhead.
b. Compute the standard cost of one unit of product.

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

Production= 2,500

Each unit requires 3 pounds of materials at $6 per pound and 0.5 of labor at $16 per hour. The overhead rate is 75% of direct labor.

First, we need to calculate the total cost for direct material, direct labor, and manufacturing overhead:

Direct material= (3*2,500)*6= $45,000

Direct labor= (0.5*2,500)*16= $20,000

Manufacturing overhead= 20,000*0.75= $15,000

Total cost= $80,000

Now, the unitary cost:

unitary cost= 80,000/2,500= $32